Half Year 2024 Ermenegildo Zegna NV Earnings Call
Unknown Executive: Hello everyone, and thank you for standing by. The Manageildo Zenia Group, each one 2024, find that sure results call will be beginning in just a few minutes' time. We thank you for your patience, and we will begin shortly. find that sure results call will be beginning in just a few minutes' time.
Hello, everyone and thank you for standing by the amount of jewelry, saying, you're great. Each one times 20 full financial results Colby beginning in just a few minutes time, we thank you for your patience and we will begin shortly.
[music].
Yeah.
Unknown Executive: Good morning, good afternoon, everyone. Please note that today's material and presentation are available under our ZeniaGroup.com website. Joining us today at the Manageildo Zenia Group leadership team.
Speaker Change: Good morning. Good afternoon, everyone. Please note that today's material and presentation are available under our senior group Dot Com website.
Speaker Change: Joining us today, the amount of Jody, saying your group leadership team.
Unknown Executive: Before we begin, I need to point out that we will make certain forward-looking statements during today's call. Our actual results may be materially different from those expressed or implied by these forward-looking statements. Also, statements are subject to a number of risks and uncertainties, including those described in our SEC filings.
So we begin I need to point out that we will make certain forward looking statements during today's call and actual results may be materially different from those expressed or implied by these forward looking statements.
Speaker Change: Oh, sorry statements are subject to a number of risks and uncertainties, including those described in our SEC filings.
Unknown Executive: Please refer to the forward-looking statements cautionary statement included at page 2 of today's presentation.
Speaker Change: He's your thoughts the forward looking statements cautionary statement included on page two of today's presentation.
Gildo Zegna: I'll now hand over to Gildo Zenia, Group Chairman and CEO. Good morning and good afternoon. And thank you for joining today's conference call on our Mejido Zenia Group, age one, 24 results. Before we speak about the numbers, let me make some comments on the sector and our strategy. And then I'll leave Janoka to go and details through our results. So far, 2024 has been challenging around the world. And across many industries, including ours, the luxury sector is experiencing a deep normalization phase. This tackles Anthony. We have been two than before in our more than one hundred years of history.
Speaker Change: Now hand over to Joe to Hussein, Yeah Group, Chairman and C E.
Speaker Change: Good morning, and good afternoon, and thank you for joining today's conference call.
Speaker Change: But age one to 24 hours.
Speaker Change: But we're always thinking about the numbers.
Speaker Change: Maybe some comments on the.
Speaker Change: Sure.
Speaker Change: And then I'll need to look at the World. These days.
Speaker Change: The new owners.
Speaker Change: So far the way Andy. Thank you, Florida has been challenging at all going forward.
Speaker Change: And of course, many initiatives, including ours the luxury sector.
Speaker Change: Yes.
Speaker Change: Normalization phase.
Speaker Change: Yes.
Speaker Change: Two of them before and our more than 100.
Gildo Zegna: And I know they might happen again in the future.
And they know they might happen again in the future.
Gildo Zegna: It is our job to deal with them with three decisions in shop actions, not only to end the current separation, but also it's possible to come out stronger. This is what we did during COVID when we learned to one branch strategy for Zegna. This is what we are doing now with some important action for all our brands. In Zegna, we are doubling down on the one branch strategy. We are evolving our communication from a broad audience approach to a targeted audience approach to engage deeper with our community or value customer. We are evolving our clandetting from relation into experience.
It's our job to deal with them with the decision and shop actions not only to end of the kind of exploration, but also possible to come out stronger.
Speaker Change: This is what we did.
You'll recall that when we launched the one brand strategy.
Speaker Change: Yes.
Speaker Change: This is what we are doing now with some important action for all of our brands.
Speaker Change: We are doubling down on the one brand strategy.
Speaker Change: We are evolving our communication from abroad. The Orleans approach to a targeted audience approach to engage deeper with our community Advisory Council.
Speaker Change: We are evolving our plans for.
Speaker Change: From relation to experience and we are evolving our collections from lifestyle to license as we need to be dealt with.
Gildo Zegna: And we are evolving our collections from life to icons as we did with our Superstitching collection. With Adrien, New York, the second chapter after the finishing guide, it is a clear example of the direction you've taken. Two weeks ago, we celebrated with an immersive experience the journey that our founder, my grandfather, took in 1938 aboard the ocean liner Rex to reach New York City to meet the clientators and started our group's American professional expansion. In Zegna, New York was designed to celebrate Zegna's heritage, to a series of innovative, invite-only on size events. During the five days, we were welcoming our villa, existing and prospecting, important clients from the old America, also by having an important team closely effectively collaborating with the local team.
Speaker Change: Steve Shoe collection.
Speaker Change: In New York, the second chapter after finishing guy.
Speaker Change: As an example, rather than actually it takes them two weeks ago, we celebrated within them.
Speaker Change: Our student experience the journey with our founder my grandfather took a 1938 aboard the ocean liner exit traditionally OCD to meet the timing cadence inside our group's American global expansion.
Speaker Change: New York was designed to celebrate genius.
Do I see somebody know that they invite only on size for that.
Speaker Change: During the five days, so we welcome them to our.
Speaker Change: Existing and prospects in both our lives.
Speaker Change: Oh somebody heading towards a team closely and effectively collaborating with the local team.
Gildo Zegna: We presented a silly problem, available only to the invited guests. And I must say it was a very success, exceeding the team and my own expectation, clearly indicating once more that you are walking on the right path. Alongside this event, we presented our former 24 capsule collection worldwide, introducing the iconic jacket and iconic garment inspired by the world of the energy that our founder himself.
Speaker Change: We presented three Bravo debatable, all leading to the large I guess.
Speaker Change: And I must say it was a great success exceeding the team and my own expectation, indicating once more.
Speaker Change: Walking or that I pass it on.
Speaker Change: Im sorry, these are 90% of our fall 'twenty four capsule collection worldwide.
Speaker Change: Introducing the E content jacket in their carnal Darwin inspired by the order of <unk>, our founder himself.
Gildo Zegna: Villa Zeg chapters will continue in 2025, with new important locations and events around the world. But not only Villa Zegna; next year we will also inaugurate our first salotto stage. The best corner of New York, our salotto would be a permanent private room where our clients would feel to be at home and to experience once more the unique legacy of Zegna bread. Moving to Tom Brown, with Rodrigo Basel, the CEO, and with Tom himself, we are making significant changes and are reinforcing the managing team to strengthen the organization. This is the case not only in China, but also at a broader level and in other regions.
Speaker Change: Their chapters will continue in 2035, new important location and demands around the world.
Speaker Change: But not only real Athena next year, where you don't want to elaborate.
Speaker Change: A lot of the best corner of New York, our sell auto with Paramount, but either drove one of our clients we feel to be its own.
Speaker Change: And to experience once more the unique legacy.
Speaker Change: Right.
Speaker Change: Moving to Tom Brown, we got <unk> and we've done and so we are making significant changes in that are enforcing the management team to strengthen the organization.
Speaker Change: This is the case not only in China, where the brand is a stage of some challenges, but also at headquarter level and then other region new leadership in marketing has been appointed a.
Gildo Zegna: New leadership in marketing has been appointed in May, and new leadership in merchandising arise before your end. The team is working on communicating both the creativity, but also the commercial range of products; the brands are successfully developing a partnership. From Fall 24, we start to see the marketing of products to complement the increase in brand awareness. and the success of the women business of decision collection as well as accessories in particular in Japan and Korea have early signs that we are taking the right actions. I believe 2024 we remain challenging for the brand, but I also believe that we Tom Brown management we are taking the right steps to prepare a healthy BTC growth trajectory in 25 and beyond.
The new leadership in merchandising arrives before year end. The team is working on communicating both of her activity, but also the commercial range of products. The brand for successful development of box shield.
Speaker Change: Following the trend before we start to see the marketing on product to complement the increase in brand awareness.
Speaker Change: And the success of the women's business on the seasonal collection as well as sensors in particular in Japan and Korea are early signs that we have the right actions.
Speaker Change: With a network of more than 100 doors, we are focusing on strengthening the local teams in China and North America as we have done in Japan, and Korea and Brady as he is in there.
Speaker Change: This is clay.
Clearly shows so and we have also secured some important flagship locations to be opened in the forthcoming months that is newer C D and E and.
Speaker Change: And talk to them, we continue to balance the channel mix.
Speaker Change: At the same time, our Allstate streamlining is ongoing.
Speaker Change: Just one comment on the Tom Brown and <unk>.
Speaker Change: Even dead after U S. Recently also the German court ruled in favor of it somehow a great achievement for the team and they began to work off their efforts.
Willing to integrate as well we remain challenging for the brand, but I also believe that.
Speaker Change: With Tom Brown management, taking the right steps to prepare healthy.
Speaker Change: Do you see growth trajectory in 'twenty five and beyond.
Gildo Zegna: Last but by no means least, the new Tom Ford creative director. If you know, along with the end state of their corporation, we announced that High the Acumen is the new creative director for Tom Ford. I just acknowledge of the luxury goods sector is super creativity and wild experience and the luxury ready to work for both men and women, makes in the perfect fit to take the lead on Tom Ford passion. And strongly confident that with each contribution we deliver on our long-term conditions.
Speaker Change: Last but by no means least a new dawn for creating that anchor is you know a long week.
Speaker Change: And staying with <unk> Corporation, we announced with Hydro <unk>.
Speaker Change: Preparing for it.
Speaker Change: <unk> deep knowledge of the luxury goods sector is superior connectivity and wireless experience in the luxury ready to wear for both men and women makes him the perfect fit to take the lead until a court session.
Speaker Change: And so I'm gonna coffee, they're bad reduced contribution we deliver on our long term ambition.
Gildo Zegna: But before I close, I also want to mention our figure. 2024 has been so far impacted by their work of self-demand for luxury ready to work. Our tapping edge in innovation and high quality production capacity makes our platform more resilient and the unique advantage for the group. We continue to invest in our failure, and for the reason, we fully confirm the important project of a new Italian shoe leather assessor plan in Parma, Italy, to strengthen our information, our internal production in leather. These are all important long term projects for the group to pursue. They will continue on selected investment or brand in talents.
Speaker Change: But before I close I also want to mention all of the year.
Speaker Change: We ended 2004 as being some sort of impact, but there was a soft demand for luxury ready for our cutting edge of innovation and high quality production capacity mix, our platform modernization and a unique advantage for the group we continue invest in it once a year and for the reasons, we fully confirm the important project.
Speaker Change: Of the new debt issue of leather assessor, Glenn environment, Italy to strengthen our information.
Production in leather.
Speaker Change: These are all important long term project for the group to pursue them and we will continue on selectively invest in our bread and talents.
Gildo Zegna: You know organization and in the network. Even if this would go short term sacrifices, they are critical to support our long term ambition.
Speaker Change: Nation and their retail.
Speaker Change: Retail network, even if this would cause short term sacrifices they are critical to support our long term ambition, let me close with some observations from my recent visit to China, Japan, United States and Canada.
Gildo Zegna: Let me close with some observations from my recent visit to China, Japan, the United States, and Canada. I do believe that we all record that the situation remains difficult. August performance can be even more challenging, and 2025 is expected to remain uncertain. But during my trips, I've been reassured by what I've seen. Whether when visiting our stores or in the meeting with landers and with Maine will take partners. The energy of our people and the trust from our partners for all our three brands make me confident about the future. And that way, the correct strategy to unleash their intact road potential.
I do believe that we will record this evolution that remains difficult August performance can be even more challenging in 'twenty to 'twenty five is expected to remain a circuit board.
Speaker Change: Early metrics I've been underserved by what I've seen where that when visiting our stores or in the meeting with lenders and we'd mean wholesale partners. The energy of our people and the trust from our partners for all of our three brands make me confident.
About the future and that we have the correct strategy to unleash their untapped growth potential.
Gianluca Tagliabue: Thank you, and now let me turn over to Gianluca.
Joe: Thank you and now let me turn over to Joe Okay.
Speaker Change: Hello.
Gianluca Tagliabue: Thank you, Gildo. Good afternoon, everybody.
Joe Okay: Thank you Jill and good afternoon, everybody, let me move to page eight of the presentation, where you'll find the first half 'twenty four results key highlight.
Gianluca Tagliabue: Let me move to page eight of the presentation where you find the first 24 results' key highlights. The preliminary revenues for each one 24 were already disclosed at the end of July, so they confirmed that they will not comment much further on that. I just remind you that in the semester we reported six percent growth year-year growth driven by Zegna Blant and by the consolidation of Tom Ford Fashion that, as you know, entered in our perimeter last year on April the 29th, 2023. Therefore, he knows the results you see today in this presentation. Tom Ford Fashion performance compares six months consolidated this year versus a two months and two days consolidated year.
Speaker Change: The preliminary revenues for each one 'twenty, Florida were already disclosed at the end of July. So they confirm then I will not comment much further on that I, just remind you that in the semester, we report the 6%.
Speaker Change: Growth year on year growth driven by brand and by the consolidation of Stanford fashion that as you know anchors in our pretty much. They were last year on April 29.
Speaker Change: 23, therefore, we know the results you see today and this presentation, Tom Ford fashion performance compares six months consolidated this year versus two months and two days consolidated.
Gianluca Tagliabue: In the first semester of 24, the group generated 637 million of growth profit, 81 million of just a little bit, 31 million of profit in terms of net profit. I will not add many comments at this point since, in the next pages, we will go more in detail on the dynamics and analysis of this result.
Speaker Change: Yeah.
Speaker Change: First semester of 2004, the group generated $637 million of gross profit 81 million of adjusted EBIT of $31 million of profit in terms of that net profit I will not add many comments at this point in the next stages, we will go more in detail on the dynamics.
Speaker Change: The analysis.
Gianluca Tagliabue: So let's move to page nine to deep dive on the main metrics of our piano, starting with growth profit. In each one of the year, growth profit rose by 10 percentage points to 637 million euros, with the margin of 66.4% on the readiness. The 220 basis points improvement from each one of last year has been driven mostly by two factors. First, a better channel mix given that the DTC revenues generated this year 76% of branded revenues. These are 72% a year ago, and as you all know, DTC growth margin is longer than the wholesale one.
Speaker Change: So let's move to page nine to deep dive on the main metrics of our P&L starts.
Speaker Change: Starting with gross profit in each one of this year gross profit rose by 10 percentage points to 637 million euros with a margin of 66.
Speaker Change: 4% on the revenues the 220 basis points improvement from each one of last year has been driven mostly by two factors first a better channel mix given that the DTC revenues generated this year to 76% of branded revenues vis vis 72%.
Speaker Change: A year ago and as you all know DTC gross margin is longer than the wholesale one and the second factor is the better inventory management.
Gianluca Tagliabue: And second factor is a better inventory management. Channel mix, the first of the two factors, is estimated to justify around half of the growth profit margin, proven being the other 50% risk, even by the inventory side. I would also remind you that this one 24 cost of sale includes still 3 million euros from the PPA purchase price allocation related charges from the comfort fashion consolidation. The absolute amount is similar to the one that we have booked in the first half of last year, which was 4 million. And this one of this year, the 3 million of this year is the last branch of the PPA charges from the acquisition of Tom Ford business, namely Tom Ford International.
Speaker Change: Channel mix. The first of the two factors is estimated to justify around all of the gross profit margin improvement and the other 50% that I've really been biting battery side.
Speaker Change: I would also remind you that each 120 for cost of sales includes 3 million euros from the PPA purchase price allocation related charges from the <unk> fashion consolidation.
Absolute amount is similar to the one that we have booked in the first half of last year, which was $4 million.
Speaker Change: And this one like this year the $3 million. This year is the last time.
Speaker Change: The PPA charges from the acquisition of Encore business.
Speaker Change: Namely for important international that is the holding company that owns the 20, plus 10 year license agreements on the Tom Ford fashion business moving now to SG&A.
Gianluca Tagliabue: That is the only company that owns the 20 plus 10 year license agreement on the Tom Ford fashion business moving out to SGNA selling general administrative in H1. This year reached 498 million euros, with a 51.8% incidence of revenue compared to 46 last year. Dipping now down on this increase in terms of SGNA incidence over revenues, I would like to underline too. First, the Tom Ford consolidation contributed to almost half of the incidence increase. Tom Ford Sassion S-GNA incidence is affected. On one side, by the Royal T-Fees, the Tom Ford Sassion pays to a sell order, and by the amortization of the right of use of the license agreement over 20 to about 10 years, the amortization is roughly 1.7 million in six months, 3.4 million over a year, and on the other side, the other factor affecting the incidence is the step up within Tom Ford Sassion of organization and systems after we took over the business.
Speaker Change: Selling general and administrative.
Speaker Change: Each one of this year reached 498 million Euro with a 51, 8% incidence of revenues compared to 46 last year.
Speaker Change: Flipping now down on this increase in terms of SG&A incidents over revenues I would like to underline two factors.
Firstly, the tongue forward the consolidation contributed to almost half of the incidence increase.
Speaker Change: For fashion SG&A incidence is affected on one side by the royalty fees that come forth fashion pace towards the Lauder and by the amortization of the right of use of the license agreement over at 20, plus 10 years, Yes amortization is roughly $1 7 million in six months three 4 million over.
Speaker Change: A year and on the other side the other.
Speaker Change: Factor affecting the incidence is the step up within the fourth version of organization assistance. After we took over the business.
Gianluca Tagliabue: The second relevant item that affects the SNA group incidence is the impact arriving from the R&D expansion initiatives, both in terms of business structure and the newly open stores, especially on the Zegna and compound side, which includes, I remind you, also the conversion of the Korean monoprene stores to the DC. Also, given the current environment, we observed that some of the stores in the newly open are experiencing a slower ramp up to their full potential.
Speaker Change: The second relevant Tyson.
Speaker Change: Affected yesterday and a group incidence is the impact to be arriving from brand expansion initiatives. Both in terms of business structure and the newly opened stores, especially on the Dania and some downside which includes I remind you also the conversion of Puds accordion mono brand stores to BDC.
Speaker Change: Also given the current environment, we observed that some of the stores newly opened.
Speaker Change: He is experienced a slower ramp up to their full potential.
Gianluca Tagliabue: Analyzing now the marketing expenses. Marketing expenses increased to 7% over earnings this semester, compared to 5.3% in H1 over last year. As already anticipated, these increases are largely linked to a different timing in the advertising cost, given that in H1 24, the group and Zegna brand in particular had many events concentrated in the first six months of the year. For instance, the audit Zegna take over in Milan, Villa Zegna Shanghai, the amplification that was very intense around the second skin collection launch, and the fashion show of Tom Ford, which last year did that exist, but not existed in our purpose.
Speaker Change: Analyzing now the marketing expense and marketing expenses increased.
Speaker Change: Two 7% over.
This.
Speaker Change: Semester compared to five 3% in each one of last year as already anticipated. This increase is largely linked to a different timing in the advertising costs given that each 120 for the group and Zane you Brian in particular AD. Many events concentrated in the first six months of this year.
Speaker Change: For instance, the Aussie Zenia takeover in Milan, <unk> Shanghai, the amplification that was a very intense around the second skin collection launch and the fashion show, Ofcom, Florida, which last year.
Speaker Change: But not in our print.
Gianluca Tagliabue: Let's now move to page 10 of the presentation where we report the adjusted EBIT for the group and five segments. As you know, the main performance metrics used by the management to analyze the economic performance of the business at group and at segment level is the adjusted EBIT and its related adjusted EBIT margin. You can find all the reconciliation in the appendix of the presentation, and I remind that the difference between the adjusted EBIT and the operating profit reported in the PNL page, in the PNL page at page 11 relates to adjustments that do not input our underlying operating activities, and regarding this, six months are entirely related to SGNA expenses.
Speaker Change: Let's now move to page 10.
Speaker Change: The presentation, where we report the adjusted EBIT for the group and by segment as you know the main performance metric used by management to analyze the economic performance of the business and group and at segment level is the adjusted EBIT and its related adjusted EBIT margin you can find all reconciliations.
Speaker Change: And in the appendix of the presentation and they remain remind that the difference between the adjusted EBIT and the operating profit reported in the P&L page.
Speaker Change: The P&L pages page 11 relates to adjustments that do not impact our underlying operating activities and regarding this six months are entirely.
Speaker Change: Related to SG&A expenses as I already mentioned in each one our adjusted EBITDA reached $81 million down 33% compared to H. One of last year. This performance has been impacted.
Gianluca Tagliabue: As I already mentioned in H1, our adjusted EBIT reached 81 million, down 33% compared to H1 of last year. This performance has been impacted, namely by the top line decline at Tom Brown, by the cost at Tom Ford Fashion to build up the organization and the team of talent, and by higher concentration of cost, especially in marketing in the first six months of the year. Opposite to last year, where we generated close to 55% of all year adjusted EBIT in H1 and 45 in H2, I think that this year the balance across the two semesters will be more skewed towards the second half of the year.
Speaker Change: Namely by the topline decline and Tom Brown by the cost at Tom Ford fashion to build up the organization and the team of talent and by higher concentration of cost, especially in marketing in the first six months of the year offered it to last year, where we generated close to 55% of.
Speaker Change: Full year adjusted EBIT in H, one and fortified in a true I think that this year the balanced across the two semesters will be more skewed towards the second half of the year.
Gianluca Tagliabue: Let's now look at our results by segment. Zegna segment that, as you know, includes Zegna brand, the textile division and third party brand, generated 12.8% margin. These are V15.5 in age 1 of last year. The difference in the margin between the two six-month periods is larger related to three aspects. First, the above-mentioned concentration of marketing cost in the first half of this year, while last year it was much more skill-making to the second part of the year. Selected business structures set up such as, as an example, the themes of personalization, make the measure CRM, correlated activities like the Zegna brand, the retail summit with BL in the Q1 of this year.
Speaker Change: Let's now look at our results by segment than the segment that as you know include Zynga brand. The textile Division third party, Brian generated 12, 8% margin. These are the $15 five in each one of last year.
Speaker Change: Difference.
Speaker Change: The margin between the two six month periods is largely related to three pathway.
Speaker Change: First the above mentioned concentration of marketing cost in the first half of this year, while last year. It was much more skewed to the second part of the year.
Speaker Change: Selected business structures to set up such as as an example, the themes of personalization that.
Speaker Change: Make the measure CRM related activities like the Dania brand retail summit, we held in Q1 of this year.
Gianluca Tagliabue: Third factor was, as I already mentioned, that few newly opened or remodeled stores, so no con stores are experiencing a lower one-top to their social potential. As already I lighted some brown, adjusted with margin performance as being determined by the decrease in revenues, only partially offset by the increase in gross profit margin driven by channel-makes and better inventory management, therefore lower off-salescence accruals.
Speaker Change: Third factor was.
Speaker Change: As I already mentioned that few newly opened or remodeled stores. So non comp stores are experiencing a slower ramp up to their full potential.
Speaker Change: As already highlighted some brown adjusted EBIT margin performance has been determined by the decrease in revenues only partially offset by the increase in gross profit margin driven by channel mix and better inventory management, therefore lower.
Speaker Change: Obsolescence accruals.
Gianluca Tagliabue: Going to Tom Ford, Tom Ford recorded 12-million-euro-adjusted negative results. This result reflects two things. First, the investment companies deserve to make in talent in organization at that quarter and market level, and those in terms of compliance to a public entity requirement. Second, our strategic decision to continue investing on Tom Ford's fashion brand and retail, even if top line is performing below the initial expectations. Let me also repeat here what I have already said. Each one of Tom Ford's fashion performances is not comparable to the numbers we have seen in the first half of last year, because the latter reflects only two months' conservation, and even more, because the first two months after the acquisition did not reflect many of the investments that we started making later on and later on.
Speaker Change: Going to Tom for the so far the recorded 12 million Euro adjusted.
Speaker Change: Negative results that these results reflect two things first the investment the company deserve to making talent in the organization at the quarter end market's level and also in terms of compliance towards public entity requirement second our strategic decision to come.
Speaker Change: Investing for fashion brand Eric deal, even if top line is performing below the initial expectations.
Speaker Change: Let me also repeat here what I have already said each one of <unk> fashion performance is not comparable to the numbers. We have seen in the first half of last year because of the latter fly for only two months of consolidation and even more because the first two months.
After the acquisition did not reflect many of them in fact meant that we started making it later and make us all I.
Gianluca Tagliabue: I know that it is difficult for you to estimate how Tom Ford's fashion performance will evolve through the year, but let's just say here that I do not expect H1 loss to double.
Speaker Change: I know that it is difficult for you to estimate out some forward fashion performance will evolve.
Speaker Change: Through the year, but like to just say that I do not expect H one loss to double.
Gianluca Tagliabue: Moving to page 11, you can see here summarized our reported income statement for H1 and H2 of the two years. Let me make here two comments. First on the financial expenses line, which declined from 44.6 million euro to 29 million euro this year. These expenses, financial expenses reduction largely reflects the cost that we had incurred at the beginning of last year for the worst reductions, which this cost was higher over 20 million euro. On the tax rate you see in implicit, slightly increasing the tax rate in H1 of this year, for the full year to help you navigate through the year and confirm what we already said in April.
Speaker Change: Moving to page 11, you can see our summarized our reported income statement for H, one and H two of the three years, let me make two.
Speaker Change: To comment first on the financial expenses line, which declined from $44 6 million to 29 million Euro. This year. These expenses financial expense reduction largely reflects the cost that we incurred at the beginning of last year for the words reductions, which.
Speaker Change: <unk> cost was higher over slightly over 20 million in Europe on the tax rate you see an implicit slight increase in the tax rate in each one of this year for the full year to help you navigate through the year I confirm what we already signed in April So we expect a normal tax rate.
Gianluca Tagliabue: So we expect a norm of tax rate to be more in the region of 30%.
Speaker Change: To be more in the region of 30%.
Gianluca Tagliabue: Let me now move to page 12 where we comment on CAPEX and trade working capital. That cash out for CAPEX in each one reached 16 million euro, over 6% of revenues. Of this 16 million euro, about 55% relates to the store network, opening the remodels, and the remaining to investments in production, including the land for the shoe factory, the Gildo Mansion that we are going to build close to Parma, and in IT systems and digital applications.
Speaker Change: Let me now move to page 12, where we comment on Capex and trade working capital.
Speaker Change: Cash out for Capex in each one reached 60 million Europe.
Speaker Change: Over 6% of revenues.
This 60 million Euro about 55% relates to store network opening our remodels and the remaining two investments in production, including the land for the shoe factory.
Speaker Change: The information that we're going to bill.
Close to bottom.
Speaker Change: E systems and digital applications as we have already anticipated 25, and 24 and 25 are going to be important years for investments in key projects that we decided not to postpone because they are fundamental to pursue our long term ambitions starting from the shore.
Unknown Executive: As we already anticipated 25 and 24 and 25 are going to be important years for investment, in key projects that we decide and not to postpone because they are fundamental pursue our long-term conditions, starting from the shoe factory where we are going to in house, at least 50% of the Zegna shoe production, and we are going to see how we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going to make sure that we are going And today please do so now by pressing Start, followed by the number one on your telephone keypad.
Speaker Change: So factory, where we are going to hit.
Speaker Change: In house at least 50% of the Dania shoe production and second because selectively we will continuously invest in store network to open some key location for our brands.
Speaker Change: As already anticipated in 'twenty four and also 25, we expect capex to be slightly above 6% on revenues.
Speaker Change: I think working capital reached 476 million Europe at the end of June or 24% on revenues trade working capital as it remains fairly stable versus last year. Thanks to a better inventory management stable trade receivables also as a consequence of some.
Speaker Change: Conversion of <unk>.
Speaker Change: Wholesale storing store into.
Speaker Change: Directly operated.
Looking at page three.
Speaker Change: Our Tunis.
Speaker Change: Look at the free cash flow like the comment that the negative $7 million free cash flow was mainly due to the above mentioned capex tightened the $60 million cash out related to the topics.
Speaker Change: Page.
Speaker Change: Net financial indebtedness I would like to outline 2004, this $24 million.
Speaker Change: Europe of cash outflows related to the acquisition of a 2% taking Tom Brown.
Speaker Change: Patients who are contractually defined put option.
Speaker Change: $15 million related to the acquisition of the Korean businesses.
And somehow.
Speaker Change: As a result of this our net financial position at the end of June was equal to $66 million of the net debt versus $11 million of net debt at the end of December I would finish here in my presentation to lease space to your questions.
Speaker Change: Thank you operator can you open up to Q&A.
Speaker Change: Thank you. Thank you I'd like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind or do you feel like your question has already been onsite you could remove yourself from the queue by pressing star for Viking.
Unknown Executive: If you change your mind or you feel like your question has already been answered, you can remove yourself from the key by pressing Start, followed by two.
Anthony Charchafji: Our first question today comes from the line of Anthony Charfaggi with BMP Paraba. Please go ahead, Anthony. Yeah, thank you. Good morning. It's Anthony Charfaggi from BMP Paraba. I hope you are doing well.
Speaker Change: Our first question today comes from the line of Anthony <unk> with BNP Paribas.
Anthony: Please go ahead Anthony.
Yes. Thank you good morning, it's something yourself centrally for Matt can probably about I hope you're doing Gwen I have two questions. Please so the first one would be on the.
Anthony Charchafji: I have two questions. Please, so the first one would be on China trading. If you can give us some comment how it was during the summer in July and August. And if you have early indication of September.
Speaker Change: On China trading.
Speaker Change: If you can give us some commentary.
Speaker Change: During the summer in July.
Speaker Change: And then.
Speaker Change: If you have early education.
Speaker Change: Oh for September.
Anthony Charchafji: And my second question would still be in terms of top line. So your mid-term target that you laid out last December was calling for a 10% top line CAGR and 20% a bit CAGR with a 2023 base. So just wanted to know if this still holds, so you expect a rebound. And if we can have this rebound in H2. Or in 2025. Thank you.
Speaker Change: And my second question.
Speaker Change: It would be and Thomas.
So your midterm target that too.
Speaker Change: That you laid out last December we're screening for 10% of planned cargo and a 20% EBITDA CAGR.
Speaker Change: 2020, Threep base so just.
Speaker Change: Yeah I wanted to know if there is still a who is who you expect a rebound.
Speaker Change: And if it if we can have this rebound in H two.
Speaker Change: Or oh in 2025, thank you.
Unknown Executive: Okay, thank you. Thank you, Anthony.
Speaker Change: Okay. Thank you. Thank you Anthony.
Gildo Zegna: On China, I love to do a look at once and then on the mid-term target, we ask Gildo to get to answer for you. Thank you. We are fine, actually. Sorry, you started your question asking. We are doing so. Thank you so much. No, Anthony. So China, we are still seeing the same projectory, the second projectory of challenging and volatile environment. So July and August has not been, we have not seen an inflection point on China so far. Let me add one piece of information in the world in China for weeks ago, and I met all major landlords.
Speaker Change: And in China, I'll ask as you look at the answer and then on the mid term targets are.
Speaker Change: <unk> got to do that.
Speaker Change: To answer for you. Thank you we are finite Chinese sorry, you started your question you're asking what are we are doing it. So thank you so much.
Speaker Change: No Anthony So China, we are still seeing.
Speaker Change: The same.
Same trajectory.
Speaker Change: And the second trajectory of a challenging and volatile buyer.
Speaker Change: Environment so.
Speaker Change: July and August that's not being that we have not seen that inflection point on China.
Speaker Change: So far.
Speaker Change: Let me add.
Speaker Change: One piece of information.
Speaker Change: They met all the major landlords.
Gildo Zegna: Surely the situation remains challenging for almost everybody. I would say they all are still positive on the mid-term as we are. But you know, it's a, I would say a kind of normalization process or consumption, and everybody is watching closely the dynamic. But from our standpoint, we have the food trust of landlords. We have a good attraction by our potential and loyal customer, and I think the event of either Janie and Shanghai a few months ago was approved. And so we are watching the situation only positive mind. And I think that we really be serious, be careful on or don't even define where opening the situation can evolve rapidly.
Speaker Change: Sunil Doshi duration remains.
Speaker Change: Challenging for almost everybody.
Speaker Change: I would say they all are still positive.
Speaker Change: On the mid term as we are.
Speaker Change: Sure.
Speaker Change: But I'd say it's.
Speaker Change: I would say it got over normalization process oil consumption and everybody.
Speaker Change: And watching closely the dynamic but from our standpoint, we have this whole prospect of.
Speaker Change: Landlords.
Speaker Change: We have a good traction.
Speaker Change: By our potential and loyal customer and I think that the mental hurdle.
Speaker Change: Zenia Shanghai, a few months ago was approved.
Speaker Change: And so we are watching this duration on that.
Speaker Change: A positive mine.
And I think that the media B C.
Speaker Change: Careful on operating they decide with the opening of the situation.
Speaker Change: Can evolve rapidly.
Gildo Zegna: Yes, maybe.
Maybe yes, maybe on inter within the quarter, if we need to give your slate.
Gildo Zegna: We did the quarter. If we need to give you flavor within the quarter, August worth then July. Where is the other? We have seen soft traffic, soft, soft demand, so softer than July August. And also by brand clearly, Tom Brown, you know, what was. Yeah, I would say yes; I would say that. Janie is holding up better than Tom Brown, I think, Tom Ford, I mean; is there is more. You know, I think potential, not potential, is more reality with the big potential. We just open a new story in the channel world and we will be watching the development.
Speaker Change: Flavor within the quarter August worse than July.
Speaker Change: Versus August we have seen a soft traffic.
Speaker Change: Soft demand so softer than July August and also by brand clearly come down.
Speaker Change: Yes.
Speaker Change: I would say, yes, I would say that.
Speaker Change: He is opening up.
Speaker Change: Better than that.
Speaker Change: Brown and I think going forward I mean, as you say.
Speaker Change: As there is more.
Speaker Change: Uh huh.
Speaker Change: Awesome potential not Muslim base I mean is this is more of that.
Neil: It's Neil.
Speaker Change: <unk> potential we just opened a.
Speaker Change: A new story in China Award.
Speaker Change: We've been watching the development.
Gildo Zegna: But we are still a bit on the midterm, and we will not slow down our plan on China.
Speaker Change: Careful but we are we are not in it.
Speaker Change: Still upbeat over the midterm and we will not.
Speaker Change: Slow down our plan.
Speaker Change: On China.
Gildo Zegna: In terms of target, you ask Anthony about target, whether the target of the center will prefer. I must be fair to you that there is no doubt that 24 has turned to be below our mission expectation. These are facts both for internal and macroism. And in particular, the role is exactly facing a similar situation. And these, I think, goes very on that one country I think that is a macro situation.
In terms of a target you asked about target what are the Italians.
Speaker Change: Send medical firm.
Speaker Change: I must be fair.
Speaker Change: To you that there is no doubt that 24 has turned to be below our initial expectations as our effects both for <unk> Sirona and macro reason.
Speaker Change: And in particular, there are also sector is facing a similar situation.
Speaker Change: And this goes beyond the one country I think it is a microbe seed.
Speaker Change: Situation.
Gildo Zegna: However, as anticipated for China, our ambitions are unchanged and that it could possibly take a bit longer, but we are committed to delivering our provinces. Okay, thank you. It's very helpful.
Speaker Change: However.
Speaker Change: Anticipated for China, our ambitions are unchanged.
Speaker Change: And it could possibly take a bit longer.
Speaker Change: We are committed to delivering our provinces.
Speaker Change: Okay. Thank you, it's very helpful and maybe I have just one follow up on the on China and maybe too.
Anthony Charchafji: Maybe I have just one follow-up on China and maybe to talk a bit about margin. So the course margin was up to 120 bips, which is a nice surprise. I mean, you mentioned, Gianluca, that half of it was on channel mix and the other half on. On on on the three management, but could you could you quantify maybe the impact of China in the regional mix? Was it a drug and maybe then the magnitude of the inventory boost if you can quantify it? Thank you. So we don't disclose the growth margin by country. So, of course, of course, it's, you know, surprise, China is the longer, longer margin in the industry.
Speaker Change: So it could be at the boat.
Speaker Change: But with the Maui, Jim So the gross margin too.
Speaker Change: 220 bps, which is which is a.
Speaker Change: A nice surprise I mean.
Speaker Change: You mentioned John Luca.
Speaker Change: A few twice.
Speaker Change: Whereas on the channel mix and the other half on.
Speaker Change: On the inventory management.
Speaker Change: Could you could you quantify maybe the impact of.
Speaker Change: For China in the individual that mix or what was it was it a drag and maybe the magnitude of the vein.
Speaker Change: The inventory.
Speaker Change: Booster.
Speaker Change: You can't quantify it.
Speaker Change: <unk>.
Speaker Change: We don't disclose gross margin by country. So of course that of course. It is no surprise to China is that longer longest margin industry. So of course, the China soft is not helping but despite this we have been able to do.
Gildo Zegna: So, of course, having China soft is not helping, but despite this, we have been able to defend our growth profit. So means that the actions on crisis, the actions on inventory, we're able to more than offset the fact that the longest country in terms of margin has not been positive. So I think we're not going to disclose to the margin back country because we're never not so. But definitely point out the point that is we read it as a positive thing, the fact that grants were able to make a further step in terms of margin and that is that was one of and still is one of the areas where we want to recover.
Speaker Change: Defend our gross profit so.
Speaker Change: That actions on prices the actions on inventory, we were able to more than offset the fact that the longest country in term of margin has not been positive. So I think we're not going to disclose gross margin by country, because we have never had not so.
But definitely for you point out the point that we.
Speaker Change: Read it as a positive thing the fact that the brands we're able to.
Speaker Change: Make a further step in terms of margin and that is that was one of them and still it's one of the areas, where we want to recall that.
Gildo Zegna: These are some peers; it's having a stronger margin knowing that, of course, we have part of the our businesses need to be at the highest. So it's not really like-for-like the comparison of our customers, but compared to last year, we were able to increase, and this despite, as you correctly pointed out, the fact that China went behind. And so I think it's an indication that our initial margin, the grand power of our brands is sustaining the crisis, although we have little by little increase the crisis. And at this point, maybe touching also point that you might ask or some more.
Speaker Change: <unk> be some peers.
Speaker Change: Having a stronger margin knowing that of course, we have parts of our businesses need to be.
So it's not really like for like all of the comparison of our cause much but comp.
Speaker Change: Compared to last year, we were able to increase and that is despite as you correctly pointed out the fact that China went behind.
Speaker Change: And so.
Speaker Change: So I think it's a it's an indication that our initial margin the brand power.
Speaker Change: All of our brands.
Speaker Change: They need yet to price.
Mrs. Although we are little by little increase the prices at this point.
Speaker Change: Maybe touching also point that you might.
Ask for some months.
Gildo Zegna: We are, I don't think at this point, we are still have huge price increases on a life for like to be done. As we have already said, we want to manage price. Two of set costs and two of set currencies, which we have been doing. We expect still to have positive input from mixes, but we are increasing even more, and the current drop tool of code days in example. We are more and more creative products, iconic products at high price point. The fact that we are seeing a recognition of customers means that we are in the right direction.
Speaker Change: I don't think at this point, we still have huge price increases on a like for like will be done as we have already said, we want to manage prices.
Speaker Change: To offset cost.
Speaker Change: And to offset currencies, which we have been doing.
Speaker Change:
Speaker Change: We expect still to ask in the blood.
Speaker Change: But from mix with me are increasing even more.
Speaker Change: The current.
Speaker Change: Drop through of coffee as an example, we are more and more creative products iconic products at high price point. The fact that we are seeing in our clinician customers needs that.
Speaker Change: We are in the right action as Jeff mentioned.
Gildo Zegna: I think the delay is. Let me just say something about the importance of the merchandise mix. I think that for any brand it becomes key. What you drop in the market in the timing or the drop. And we see the importance of continuity product. However, there is a risk that we will allow that the brand relies too much and continue to draw not enough in innovative products. So we've seen that the draw tool that was delivered after the summer, I mean, had a positive effect because of the weather. So this is a push for us to continue with business strategy not only in Zegna but also in the other two brands because we see that when you come out with units but only to your brand deliver the wealth in the store to our customer, potential new customer, you get reaction.
Speaker Change: I think let me just seeing them.
Speaker Change: See something about the importance of the merchandise mix of deemed it for any brand it becomes key.
Speaker Change: Once you Jordan the market gain in the timing of the job.
Speaker Change: And we see.
Speaker Change: The importance of continuing to bump.
Speaker Change: Product.
Speaker Change: However, there is a risk in that way.
Speaker Change #100: But I had a nice promotion will continue probably not enough any novelty cargo. So we've seen that the draw to what was delivered after the summer had positive effects.
Speaker Change #100: The awards so these Esa.
Speaker Change #100: <unk>.
Speaker Change #100: Push for us to continue with this new strategy not only in <unk>, but also in data to Brad because we see that when we've come out with it.
Speaker Change #100: Units.
Speaker Change #100: Coming to your brand.
Speaker Change #100: Well in the store.
Speaker Change #100: Two our customer potential new customer.
Speaker Change #100: Action.
Gildo Zegna: Whether we channel at the States or over other, so I think that since full winter with the first drop strategy season, we confirm the validity of that strategy together with the validity of the continuity program, replenishment program that however has to be moderated in order to leave more room for newness. And I think that we are leading up the entire supply chain, the failure and you know the material, the fabric they are becoming extremely important.
Speaker Change #100: Whether it be China or other states or.
Speaker Change #100: Or whatever so.
Speaker Change #100: Good.
Speaker Change #100: The winter was the first drop.
Speaker Change #100: So thats as you season, we confirmed the validity of a bit so.
Speaker Change #100: <unk> together with the validity of the continuing team.
Speaker Change #100: Program.
Speaker Change #100: Management program.
Speaker Change #100: However, it has to be moderated.
Speaker Change #100: In order to leave.
Speaker Change #100: More room for newness.
Speaker Change #100: And I think that we are giving up the entire supply chain.
Speaker Change #100: The maintaining of the fabric of yen, becoming extremely important.
Gildo Zegna: We are ready to unveil a couple of new projects that we meet were already in the season and we think that on the on the upper end of our scale and we think that those projects will be really coming coming out at the right moment. So the customer is there and is able to provide the. Do you come out with units? Next we see it because the ball.
Speaker Change #101: Ready to unveil a couple new browser for either limit early next season, and we think that on the on the upper end.
And of our scale and we think that those projects.
Speaker Change #101: Really coming coming out with at the right moment.
Speaker Change #101: So the customers there.
Speaker Change #101: And he's able to that but I'm going to do.
Speaker Change #101: Come out with newness.
And next we seek it comfortable.
Speaker Change #101: Okay.
Anthony Charchafji: Okay, thank you very much. Very helpful.
Okay. Thank you very much.
Unknown Executive: Thank you, Anthony, and we can move to the second question or set of questions, actually. Thank you.
Thank you Anthony and we can move to the second.
Speaker Change #102: Questions. So first up questions, let's see.
Thank you. The next question comes from Louise the single highest with Goldman Sachs.
Louise Singlehurst: Next question comes from Louise, a single person with Goldman Sachs.
Louise Singlehurst: Louise, please go ahead. Hi, good afternoon everyone. I have one question. One quick follow-up on China just to clarify. Are there any changes in terms of the plans for stores, or have you delayed any kind of store rollout or refurbishment for the time being just to check that there's nothing happening medium term? And then my main question is actually regards to the EBIT and the possibility of a really good growth margin expansion. Can we expect that to hold just in terms of growth margin in the second half? Are there any kind of actual, in terms of like current, et cetera, headwinds that we should be considering in the second half?
Speaker Change #103: Please go ahead.
Speaker Change #104: Hi, good afternoon, everyone Hello, Thank for taking my questions.
Speaker Change #105: Just one quick follow up on China, just to clarify are there any changes in terms of the time. So they'll have you delayed any kind of store rollout the refurbishment for the time being just to chat that there's nothing happening.
Speaker Change #105: Medium term and then my main question regards to the EBIT profitability, obviously, a really good gross margin expansion can we expect that to hold just in terms of gross margin in the second half are there any.
Speaker Change #106: Kind of a factual in terms of like currency headwinds that we should be considering in the second half and when we think about the underlying opex opex cost grapes looked at there was around 20% in the first half obviously accelerated with comfortable with but can you help us think about the underlying inflation.
Louise Singlehurst: And when we think about the underlying optics, the optics cost growth looked to those around 20%, and the first half obviously accelerated with Tom Ford. But can you help us think about the underlying inflation and the outlook for the second half? And if there's any cost-saving activity to consider and to help protect the margin in a tougher macro environment. Thank you. Thank you very much.
Speaker Change #106: Outlook for the second half and if there's any cost saving activity to.
Speaker Change #106: To consider and to help protect the margin in a tougher macro environment. Thank you.
Speaker Change #106: Yeah.
Speaker Change #106: China, NUCYNTA and before we had it wrong.
Speaker Change #106: And so we had a few project.
Speaker Change #106: You're opening a few.
Speaker Change #106: The service went up stores or so.
Speaker Change #106: We did them and I think that we're happy to have done it for 25, we are considering certain debt.
Speaker Change #106: <unk>.
Speaker Change #106: Are there too.
Speaker Change #106: How conservative it is for them.
Gildo Zegna: And there is a potential study to consolidate some doors; you know, maybe show the market where we have too many doors and maybe we have to consolidate. And so we are working on a plan that doesn't stop. If you want the development of our brand in China, but maybe consolidating some doors. And the rebalancing, if you want to, there's more with the need there with the big size doors that would help. I just make an example in you know, we had a good traction with some resort doors, you know, we have opened one of doors and this is quite new to us.
Speaker Change #106: And that is.
Speaker Change #106: Potential.
Speaker Change #106: The study.
Speaker Change #106: Consolidated some doors at all.
Speaker Change #106: And maybe in certain markets.
Speaker Change #106: We have.
Speaker Change #106: So many doors, so maybe with the consolidated and so we are working on a plan.
Speaker Change #106: But if you want.
Speaker Change #106: Development of our brand in China, but maybe consolidate some doors and a rebalancing if you want to.
Speaker Change #106: Theres more with their needs.
Speaker Change #106: With a big size.
Speaker Change #106: That would help.
Speaker Change #106: Just maybe an example of that.
Speaker Change #106: In Europe, we had a good traction with this.
Speaker Change #106: There's all doors, we have open smaller doors.
Speaker Change #106: These vehicles are quite new to us so.
Gildo Zegna: So the testing we're doing in some area could be helpful to the other. I mean, another example. Real Agina, real Agina South Agina had been tested; will be tested in New York. And we will try to keep the best out of it. So there could be maybe fewer, less doors. And maybe in addition, a few addition of South Virginia to car indoors in major market that can make our offer even more precious. And even more upper luxury than the one we have in line with the personalization approach of our brand, which is moving to be very effective.
Speaker Change #106: The testing we're doing some area that could be helpful to the other I mean, another example, <unk> has been tested.
Speaker Change #106: <unk> will be tested in New York, and we tried to take the best out of it either.
Speaker Change #106: So there could be maybe.
Speaker Change #106: Fewer less doors.
Speaker Change #107: And maybe in addition, a few additional cellphone zinia two current doors in major market that can make our offer even more precious.
Even more <unk> than the one we have in line with the personalization of our approach of our brand which is proving to be.
Speaker Change #107: Very effective and they're seeing the same experience. It can also Tom Ford and Tom Brown.
Gildo Zegna: And the same same experience can hold true for Tom Ford and Tom Brown. What the livinga with Tom are doing in Tom Brown with the mature events. Also, with the help of our major service in the most commercial part of the collection, it is slowly to be effective. Likewise, applies to Tom Ford to Tom Ford. We have given them the maximum, the best of our major major organization. And they see that they are going to organize in men, and I'm going to be very effective in particular during the state. So I think there is a report of cross utilization or some of that potential product is some sort of what is right and what is right in order to first of all in for each of the three brands, regardless of the geography.
Speaker Change #108: Rodrigo XOMA doing Tom Brown, the couture events.
Also with the help of our made to measure service.
Speaker Change #109: In the most commercial part of the of the collection has proven to be effective.
While supply going forward, but so far that we haven't given them.
Speaker Change #109: The maximum.
Speaker Change #109: The best of our made to measure.
Speaker Change #109: Organization.
Speaker Change #110: And they see the Randgold.
Speaker Change #110: As you may have.
Speaker Change #110: Proving to be very effective in particular in the United States. So I think that is.
Speaker Change #111: Any broad across the organization with some O'brien industrial product.
Speaker Change #111: What is right and what this looks like in order to foster growth.
Speaker Change #111: For each of the three branches regardless of the geography.
Gildo Zegna: Thank you.
Speaker Change #111: And can we is that enforces that quote.
Speaker Change #111: Yes.
Speaker Change #111: So the question was on the EBIT.
Speaker Change #111: Tomorrow.
Speaker Change #111: And if so what we haven't seen in the third possibility to correct me if I'm wrong, but is.
Speaker Change #111: Is this something that we can project in the second half of the year.
Speaker Change #111: And actually there was some.
Speaker Change #111: And on the output side and then on the office staff, So Lisa nice and.
Speaker Change #111: On the gross margin the numbers that we are publishing which is between 66 and 60.
Gianluca Tagliabue: We don't see a major element that can move the needle up or down. I called out already, but it's not material. There is a 3 million PPA that is not the orange. For the rest, we are not calling out anything that is material that might move the needle, for instance. Also, some currencies; we are already covered on the form winter 2021. So, from an edging perspective. So, I think we are in a good shape to bring the same growth profit margin through the year. In terms of off-ex year, I would decouple marketing from SNA. In marketing, the incidence in the first half as the 7% last year, four year.
Speaker Change #111: 7% is something we don't see.
Speaker Change #111: Major.
Speaker Change #111: Element that can move the needle up or down that I called out already but it's not material at least 3 million PPA that is not recurring for the life.
Speaker Change #111: I'm not calling out anything that is.
Speaker Change #111: That might need a for instance.
Speaker Change #111: So some currencies we are already covered on this warm winter 74, so far.
Speaker Change #111: From a hedging perspective so.
Speaker Change #111: I think we are in a good shape to bring the same gross profit margin through the year in terms of Opex year, I would decouple marketing from SG&A.
Speaker Change #112: In marketing the incidents in the first half has been 7% last year full year. The incidence was more close to six.
Gianluca Tagliabue: The incidence was more close to 6%, and so our full year would be closer to the 6% other than 10%. And that's exactly the point that we mentioned before. So, we have a balance of expenses in marketing that is much more weighted on the first half. But the full year will go back to an incidence that is closer to the one last year. In terms of SNA, I don't call out any major trajectory of change compared to last year. Of course, we are reducing selectively some topics which might differ on deprecation more through next year.
Speaker Change #112: And so our full year will be closer to the six 7% and that's exactly the point that we mentioned before so we have.
Speaker Change #113: <unk> expenses in marketing that is much more weighted on the first half, but the full year will grow back to an incident that is closer to the one of last year.
In terms of SG&A I don't call out any major trajectory of change compared to.
Speaker Change #113: Two last year of course, we are reducing selectively.
Speaker Change #113: On Capex, which might differ.
Speaker Change #113: Depreciation more through next year, we are reconsidering some discretionary costs.
Gianluca Tagliabue: And we are reconsidering some discretionary costs. We are intervening, and that is mostly on the GNA side. So, but I don't think it's a major change if you look the first up. It's more inertial pattern from an inflation standpoint. And of course, we are paying all the attention to no priority and discretionary cost that we can reconsider. So, that would be probably the only element of inflection point in the second part of that GNA. The biggest one being on market. I don't know if we answered your questions. If you have any follow up. That's great.
Speaker Change #114: We are intervening in that is mostly on the G&A side.
Speaker Change #114: So, but I don't think it's a major Ah.
Speaker Change #114: Change if you look at the first half.
Speaker Change #114: It's more in the national pattern.
Speaker Change #114: From an inflation standpoint and of course, we are a single.
Speaker Change #114: All the attention to no priority in this kind of shrink costs that weekend.
Speaker Change #114: Reconsider.
Speaker Change #114: So that would be probably being the enemy.
Speaker Change #114: Inflexion point.
In the second part of that journey.
Speaker Change #115: One being on Mark.
Speaker Change #116: And I don't know if Luisa if we answered that for your questions. Oh, if you have any follow up.
Speaker Change #116: That's great. Thank you.
Unknown Executive: Thank you. I don't know if we have any follow-up questions.
Thank you.
Speaker Change #117: I don't know if we have any follow up questions otherwise I think we can.
Unknown Executive: Otherwise, I think we can. We can close the call. If you have any follow-up question, any question, we are here, operator, but let us know. Otherwise, we thank everybody.
Speaker Change #118: We can close the call Uh huh.
Speaker Change #119: A follow up question anyway. So we are here.
Speaker Change #119: But let us know otherwise that we thank you everybody.
Unknown Executive: At this time, we do not currently have any questions registered. Okay. So, thank you so much for the questions. And we are going to see in a very short period of time.
Speaker Change #120: At this time, we do not currently have any questions registered.
Speaker Change #120: Okay. So.
Speaker Change #120: Thank you so much for.
Speaker Change #121: Yeah for the questions.
Speaker Change #122: We are going to see in a very short period of assignments on October 22nd we will have our Q3 avenues that the conference call. We will meet that again. Thank you all for the time and for any follow up any question any deep dive I, Lisa and myself, we are whenever you.
Unknown Executive: So, October 22nd, we will have our two, three revenues results conference call. We will meet again there. Thank you for the time.
Unknown Executive: And for any follow up, any question, any deep dive, a little and my child producer, we are here whenever you want. Thank you. Ciao.
Thank you Charles.
Speaker Change #122: Sure.
Unknown Executive: Thank you, everyone, for joining us today.
Speaker Change #123: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.
Unknown Executive: This concludes our call, and you may now disconnect your line.