Full Year 2024 Ermenegildo Zegna NV Earnings Call
Hello, everyone and thank you for standing by the amount of Georgia is that New group. That's why 2020 full financial results call will be beginning in just a few minutes time.
We thank you for your patience and we will begin shortly.
[music].
Good afternoon, and good morning, everyone.
For joining of the M&A Judah Azania group FY 'twenty 'twenty four financial results call.
Please note that today's material and presentation are available under the Zenia group Dot Com website.
Speaker Change: Joining us today, the senior group leadership team, including Judo Dania, The group CEO and John Luca totally a boy group CFO and C O I.
Speaker Change: Before we begin we need to point out that the team will make certain forward looking statements during the call.
Speaker Change: The group's actual results may be materially different from those expressed or implied by these forward looking statements.
Speaker Change: These statements are subject to a number of risks and uncertainties, including those described in our SEC filings.
Speaker Change: Please refer to the forward looking statements cautionary statement included at page two of today's presentation.
I will now hand over to Jos Dania.
Speaker Change: Thank you and good morning, and good afternoon, everyone.
Speaker Change: And thank you for joining us today to talk about them as she goes yeah go full year 'twenty for us.
Speaker Change: As you all know 24, it was a different in Europe than what we initially planned.
Speaker Change: Despite the challenges we delivered an adjusted a bit.
Speaker Change: 184 major new World.
Speaker Change: And although I cannot be fully satisfying the numbers you presented today.
Speaker Change: I'm absolutely sure by the proven strength of our teams in navigating challenging moments with discipline and determinations.
Speaker Change: I would like to start this call by sharing some reflections on last year as well as our outlook going forward.
Speaker Change: First let me start by commenting on the most recent event the Tom Ford photo in the 25 plus years on batteries.
Speaker Change: And personally I cannot recall that Jim and then non non nameless a claim from the press and key opinion leaders.
Speaker Change: This show has been a celebrated its one of the best of the season.
Speaker Change: Recognized for its innovative collection business.
Speaker Change: Also we generated double the media impact of the brands. So this show.
Speaker Change: It's not just about at the show was a powerful testament to why the acumen ability to evoke jump forward to a model and sophisticated interpretation of sensuality and then I guess.
Speaker Change: And we are already starting to see customer interest in their collection. They see now buy now piece those already available in stores being positively received as well as the full winter of 'twenty five.
Speaker Change: Great.
Speaker Change: Let's say campaign.
Speaker Change: Of course these days is the first step.
Speaker Change: Sustaining these moment to them and they know the thoughtful fashion team is fully focused on doing exactly that.
Speaker Change: It's also important to recognize that these show would not have been possible at least not.
Speaker Change: Our success with that.
Speaker Change: The contribution of our unique <unk>.
Speaker Change: Our integrated supply chain with artisan working tirelessly day and night in the lead.
Speaker Change: Today show to achieve such perfection.
Speaker Change: So bravo to all of them.
Tom Brown: Second Tom Brown.
Speaker Change: The February Shaw.
Speaker Change: Confirm that we have already discussed about their brand journey til.
Tom Brown: Tom Brown Theres always stood for ex parity crafted products and distinctive tailing.
Tom Brown: These DNA has and always will be there with based on debt to evolve the brand as easy as to what the team is doing.
Tom Brown: We are enhancing newness, while protecting the unique four bar emblem.
Tom Brown: In Peru in Nebraska, the texture of the collection and the other day in store offering for both men and women that.
Tom Brown: But all of these while the company thought was this on the in building a strong culture.
Tom Brown: Last week, the brand opened a new store in Palm Beach.
Tom Brown: Florida and soon we will open.
Tom Brown: California, and New York made there's an avenue.
Tom Brown: An important step in enhancing its footprint in the United States.
Tom Brown: Let me also mention the February furniture show and they're really sees those ads, which confirmed that the brand collection, that's been highly appreciated by customers and last but not least they never too sure. They do cheat deed. The grammys. She before we turned it answer all existing Tom Brown.
Tom Brown: It's really the testament of the strength of our brand.
Tom Brown: Finally on senior.
Tom Brown: The vendors that almost cozy collection and they know that they love. It doesn't campaign, we launched with Mrs that are out of Montana.
Tom Brown: Outperformed our expectation.
Tom Brown: Not only our existing customer, but also new ones.
Tom Brown: This is part of our future journey to engage both existing and potential customer with broad, though of the highest quality and the exclusivity.
Tom Brown: Outstanding graph machine and the unique heritage.
Tom Brown: In June we will.
Tom Brown: Take all of these to Dubai and market. There continues to show impressive growth and appreciation of the Zale brand.
Tom Brown: To celebrate our special relationship with Dubai Zane Yeah. We lost his first show outside Milan, alongside a weeklong realization experience. This.
Tom Brown: After Shanghai and New York.
Tom Brown: It also proves the strength of.
Tom Brown: Our personalization project.
Tom Brown: Let me also briefly touch on two important project.
Tom Brown: Our commitment to excellence.
Tom Brown: Bank and to the environment.
Tom Brown: We recently appointed our first 20 minus three or four academia, the minus three and in dental school dedicated to preserving the unique knowhow, we have developed across the entire luxury value chain.
Tom Brown: It is a significant project inspired by our founders landless will suit of excellence and commitment to the made in Italy.
Tom Brown: In 25, you continue to work to make a little bit more inclusive in that.
Tom Brown: Diverse workplace, and particularly satisfying to say that some 50% of our managerial position are now covered by women.
Tom Brown: And last for me the most important we continue to invest on traceable raw materials across our brand.
Tom Brown: These project loans and their goals achieved unimportant, but for our group.
Tom Brown: Sustainability is much more than just is sustainability and caring for our communities.
Tom Brown: Sure.
Tom Brown: We are.
Tom Brown: And we'll continue to do so.
Tom Brown: Now, let me take a moment to talk about 25, and our mid term targets first of all let.
Tom Brown: Let me provide some color on current trading since I know this will be your first question.
Tom Brown: The Q1, 'twenty five trends still reflects a challenging environment in China.
Tom Brown: In addition, we will continue to reduce their wholesale footprint across all brands in line with our strategy focused on the DC and customer Centricity.
Tom Brown: These will continue to be a particular phone who has had thom browne, especially in the first part of the year in fact, we.
Tom Brown: We do expect that trend and Tom Brown hosted channel in Q1 of this year to be similar to Q1 'twenty four.
Tom Brown: We also announced today an update of our mid term targets, we expect to reach our revenue between $2 2 billion and $2 4 billion with an adjusted EBIT between $250 million and $300 million.
Tom Brown: These assumptions are based on are still cautious outlook for 25 with an expected low single digit growth in revenue and adjusted EBITDA.
Tom Brown: Our assumption for this year factor in the expectation that the current challenging environment and greater China.
Tom Brown: But assisted in particular in the first semester.
Tom Brown: Also due to the negative trend in Hong Kong.
Tom Brown: We anticipate more sustained growth in 'twenty six 'twenty seven is there.
Tom Brown: The steps we are currently taking a cross all three brands and now a full year begin to yield results.
Tom Brown: And you have my full commitment that we are working to turn them into reality.
Gianluca: Thank you and let me turn over to Gianluca.
Gianluca: Thank you <unk>, let's move to page 10 of the presentation, where we find.
Gianluca: <unk> full year 'twenty four result highlights the revenues for this year, we're already disclosed at the end of January and we confirm them at $1 billion.
Gianluca: Seven.
Gianluca: Up 2% year on year, driven by senior brand organic growth.
Gianluca: <unk> for the group reached 67% gross margin and adjusted EBIT of 184 and <unk>.
Gianluca: Profit of $91 million, let's move to the following pages to comment more on this in Brazil.
Gianluca: On page 11, starting with gross profit in full year for gross profit rose by 130 basis point.
Gianluca: Two $1.297 billion with a margin of 66, 6% 130 basis points improvement from last year has been driven mostly by two factors.
Speaker Change: Sure channel mix more skewed toward DC as the major driver of this improvement in 2004, DTC revenues reached 78% of the three combined Brian revenues versus 73% last year and as you know DTC growth market areas.
Speaker Change: A higher margin than the wholesale one second factor and better inventory management, which will see.
Speaker Change: In the.
Speaker Change: Trade working capital on page, let me also remind you that in full year 'twenty for cost of sale.
Speaker Change: There's almost $4 million of Gulfport fashion.
Speaker Change: EBITDA related charges versus like the location. This charges were $15 6 million in full year 'twenty three.
Speaker Change: 'twenty 'twenty four amount is the last time.
Speaker Change: PPA related charges from the acquisition of the remaining 85% of <unk> that is the company that signed the 20, plus 10 year license agreement for the Tom Ford fashion business.
Speaker Change: G&A SG&A in full year 'twenty four reached $1 billion.
Speaker Change: When the 51, 8% incidence of revenues compared to 47 three in full year.
Speaker Change: The increase in SG&A incidence of revenues is late Q3 blackberries.
Speaker Change: First the investment in talent in the organization across different functions, we have enforced all the three brands even at these important Hawaii life that investments made at Gulfport fashion.
Speaker Change: Ah represents the vast majority of increase of SG&A in absolute terms versus 2023 also related to the fact that this year, we had 12 months, while <unk> 'twenty three we had eight months of film for Tesh.
Speaker Change: Second factor.
Speaker Change: The expansion of the store network.
Speaker Change: So the conversion of the Caribbean.
Speaker Change: Two DTC for both vignettes on Brown clearly when we launch a new store either from converting some ramp up time is needed before reaching maturity.
Speaker Change: Third factor that negative operating leverage in particular at Thom Browne since we decided to streamline the wholesale business, which I have in mind declined by 33% versus prior year inorganic terms moving.
Speaker Change: Moving to marketing expenses and cleansing going before we continue to invest in our brand marketing expenses were <unk> $1 million equal to six 2% of revenues slightly above the $150 million Mark achieved in 'twenty, three which at the time was six <unk>.
Speaker Change: What percent of revenues.
Speaker Change: This is in line with our indication all of the fair Mr marketing revenues incidents of around 6%.
Speaker Change: As already anticipated in the call related to <unk> result.
Speaker Change: In 'twenty, one before we experienced the different timing of spending and marketing fully related to the different concentration of event across the year, which is being more intense Nick 124 compared to <unk> two.
Speaker Change: Let's now move to page 12 of the presentation, where we report gives us the EBIT for the group and by segment. It's always this is the main performance metric used by management to analyze the performance of the business and group and segment level and you can find all delinquency acos in the appendix of this presentation in full.
Speaker Change: <unk> 24 hour adjusted EBIT reached 184 million the newest compared to 220.
Speaker Change: <unk>.
Speaker Change: At Gmail documented as a result reflects largely the challenging sector environment, especially ECR and the decision to streamline the wholesale business at film Brown, but reflects also the efforts that have been made to improve cost.
Speaker Change: And postponed some projects that are that have not been considered at priority.
Speaker Change: This effort is continuing also in 2025 recently, we have taken for instance, some important decisions as it regards to all of the year, where we are reorganizing the activities.
Speaker Change: The fabric Kathy.
Speaker Change: By concentrating them from the current two facilities into just one site and we are still working on other funds of optimization at 360 degrees across the group.
Speaker Change: In particular last year Thom Browne segment, that's been the most specialized in terms of adjusted EBITDA performance, adding the recorded the strongest the reduction in revenues minus 21%, so again versus 2023.
Speaker Change: In 'twenty four as being only partially mitigated by cost control actions.
Speaker Change: Tom Ford Fashion segment reported a loss at EBIT adjusted level in line with our expectation and also in line with the results that we reported in each one actually that adjusted EBIT of Gulfport fashion in the second half of 2024 key slightly above breakeven.
Speaker Change: The full year adjusted EBIT performance of stone professional reflect the cost to build the platform to support the long term growth of this business going from design merchandising.
Speaker Change: System to regional leaders and so on.
Speaker Change: Lost convenience segment as you know includes Zenia, Brian Textiles Division.
Speaker Change: Third party brands.
Speaker Change: This segment generated an adjusted EBIT slightly south of 14% 70 basis below 2023.
Speaker Change: This performance reflects our decision to keep on pursuing strategic projects that are important for the long term of the brand in a market that over the year has become more challenging.
Speaker Change: <unk> I have to say that on the other side. The team is being responsive on working on cost control and containment actions on the positive side corporate costs, including the intersegment eliminations decreased to $12 1 million compared to $30 million.
Speaker Change: Thank you guys, mostly lower cost for short term and long term.
Speaker Change: Moving to page 13, you can see a summarized our reported income statement, let me make one comment on taxes as you see the effective tax rate tax rate moved to 30% more normalized level compared to 20% of prior year over year, which was mainly a result.
Speaker Change: Non taxable income.
Speaker Change: As a result of the evolved we reported gross profit in 2024 at 19 point in time, maybe in Europe.
Speaker Change: I can also anticipate that based on the 'twenty 'twenty four resolved and.
Speaker Change: Knowledgeable.
Speaker Change: The year the dividend per share should be at least equal to that of the prior year. The board of directors proposed a dividend distribution of 12 zero.
Speaker Change: Ordinary share, which equals to a total dividend distribution of roughly $13 million Euro Leslie.
Speaker Change: Let me move now to page 14.
Speaker Change: Capex in Taiwan.
Speaker Change: Indications catch up.
Speaker Change: Okay.
Speaker Change: Mortgage.
Speaker Change: Okay.
Speaker Change: Okay.
Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: And so.
Speaker Change: Production.
Speaker Change: Great.
Speaker Change: Close to five months.
Speaker Change: Okay.
Speaker Change: Thank.
Speaker Change: Thank you.
Speaker Change: <unk> is going to be another important here in terms of capex not only on the distribution side, whether it's still obviously products.
Speaker Change: And completing the new factory by six and.
Speaker Change: And for this reason, we expect Capex for 2011 five to be between six and 7% also this year.
Speaker Change: Great.
Speaker Change: Right.
Speaker Change: And then at the end of December 2004, which is 23, 6% of revenues compared to $449 million at the end of 2023 and.
Speaker Change: And we outlined suddenly management.
Speaker Change: Equally remains flat.
Speaker Change: Versus prior year.
Speaker Change: Free cash flow.
Speaker Change: At page.
Speaker Change: That means that the group generated $10 million of free cash flow positive despite.
Speaker Change: Okay.
Speaker Change: 100000.
Speaker Change: No major comment.
Speaker Change: On page 16 of the ports.
Speaker Change: Okay.
Speaker Change: As a result.
Speaker Change: December was equal to $94 million of net debt.
Speaker Change: Versus $11 million.
Speaker Change: 2020.
Speaker Change: We'll finish here in my presentation to lease space to your question.
Diego: Thank you. Thank you Daniel Thank you Diego and please operator can you open up.
Speaker Change: Hum.
Speaker Change: Thank you we will now begin the question and answer session. As a reminder, if you'd like to ask a question. Please do so now by pressing star followed by the number one on your telephone keypad.
Chris Hung: The first question comes from Chris hung with UBS.
Speaker Change: Chris. Please go ahead.
Chris Hung: Hi, congratulations on the results from UBS can I ask three questions. Please.
Chris Hung: Christiane latest trend in Q1, thanks for the color on China, but can you also share some details on how trends have so far shaped up in the U S.
Chris Hung: There's increasing concerns around the American consumer is slowing down my second question is on vast EBIT margin, which is very nice to see I mean ahead of expectation.
Chris Hung: I presume this is reflected off accelerating DTC growth into the second half of the year.
Chris Hung: Can you share some thoughts on margins going forward and how much confidence do you have and delivering on constant improving margin.
Chris Hung: Segment, both sequentially, but also year over year.
Speaker Change: Lastly on Tom Brown, if I remember correctly you are currently adjusting the product format of Nebraska.
Speaker Change: Can you share some update on that front end and when we could expect a refreshed product portfolio. Thank you so much.
Speaker Change: Thank you Chris.
Speaker Change: It's a very interesting question. So the first one on <unk>.
Speaker Change: The China in the first quarter on specifically on the U S. I leave it all.
Gianluca: And then maybe gianluca.
Speaker Change: As I look at the data.
Speaker Change: I wasn't at this stage of your weak signal.
Speaker Change: I must say that.
Speaker Change: I was impressed by their resilience.
Speaker Change: So we keep doing well.
Speaker Change: Both for <unk> and <unk>.
Speaker Change: It means we have a good traction and so you know.
Speaker Change: We are oh.
Speaker Change: Uncertain, what the Terry might break, but we are prepared to face the challenges and the thing that our customer base is.
Speaker Change: Resilient.
Speaker Change: For whatever is happening and I think it is across the country.
Speaker Change: It's quite it's quite interesting so we still have a positive mind on the.
Speaker Change: The United States market.
Speaker Change: <unk>, Canada, let's say.
Speaker Change: There is a little bit.
Speaker Change: A different attitude.
Speaker Change: <unk> never asked about Latin America Latin America.
Speaker Change: At this time.
Speaker Change: And last year ended and how it got started.
Speaker Change: Rent is from.
Speaker Change: You cover.
Speaker Change: Greater China I might.
Speaker Change: Say that whole situation on the slide.
Speaker Change: Challenging.
Speaker Change: And we see it.
Speaker Change: Right.
Speaker Change: PSD.
Speaker Change: Q1.
Speaker Change: Q4.
Speaker Change: Thanks, Alright.
Speaker Change: I think that at this point, we expect the negative.
Speaker Change: Okay.
Speaker Change: For the overall region by 'twenty five.
Speaker Change: Some more color for the.
Speaker Change: Award.
Speaker Change: We are seeing.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: It just seems to us.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Pretty good.
Speaker Change: In the USA.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Alright.
Speaker Change: I think the line is bad we can already share.
Speaker Change: No.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Uh huh.
Speaker Change: I know at least me I cannot hear very well.
Speaker Change: Okay.
Speaker Change: Yeah, I'd say Oh boy.
Speaker Change: Yes, yes, now it's better maybe if you can kindly repeat the comments.
Speaker Change: Hong Kong and Europe. Please thank you so much.
Speaker Change: On Europe, or Europe, Europe going to Europe.
Speaker Change: On conger very challenging.
Speaker Change: But if you go to this first quarter.
Speaker Change: The rest of China, I think the same picture as of Q4.
Speaker Change: And the thing over there already that China would be negative in 'twenty five.
Speaker Change: Europe still good.
Speaker Change: Extremely well.
Speaker Change: It's in particular.
Speaker Change: Dubai.
And so I think that if we if we put together Europe, United States and the ambulance.
Speaker Change: No sign of it.
Speaker Change: Deterioration and we remain on a positive.
Speaker Change: Beating.
Speaker Change: For the rest of the year.
Speaker Change: Okay.
Speaker Change: Okay great.
Speaker Change: And so very clear thank you.
Speaker Change: Okay.
Speaker Change: And I'll leave it to <unk> to comment on any of it and then maybe I'll go back to Dana.
Speaker Change: Brown question, though.
Speaker Change: So your question about the EBIT also related to DTC growth. So I think it from a start from the evolution of our.
Speaker Change: We see channels through the year and buy land at the end with.
Speaker Change: The EBIT.
Speaker Change: So we declared as single.
Speaker Change: See what low single digit growth expected in EBIT for the year and complex needs to be allowed to through the evolution of geography as Jim said by channel and also by brand by channel, we see definitely EPC as the engine of growth.
Speaker Change: We are expecting we commenced that PTC weighed on branded revenues moved from 73 to 70.
Speaker Change: And this year we have.
Speaker Change: <unk> talked about the goal of blending.
Speaker Change: The 80% of DTC with Dania brand moving very close to 90% at this point so that is one driver.
Speaker Change: All of our evolution, we have different velocity that we are expecting <unk> by brand with dania and going forward.
Tom Brown: Fashion above the average Tom Brown and.
Tom Brown: And also textile for the size of that is FX.
Tom Brown: Stylists are still below the App search Tom Brown.
Tom Brown: We are expecting.
Tom Brown: The Q1 decline of wholesale debt.
Tom Brown: Yeah.
Tom Brown: Okay.
Tom Brown: Not to be representative of the full year, but still we are expecting wholesale from brown in the double digit down.
Tom Brown: And that's going to be one driver.
Tom Brown: <unk>.
Tom Brown: I think the theme for our EBIT.
Tom Brown: Low single digit growth.
Tom Brown: As it refers I think you were asking also dania brand.
Tom Brown: In the second half of this year, then you brand it recorded a 15% adjusted EBIT margin.
Tom Brown: We have to remind that that 15.
Tom Brown: As a consequence also the timing shift of some marketing expenses. So if we look at the full year was $13 nine which is more representative of this.
Tom Brown: Many of the identified for everybody, but also for the Dania eight still a year of investment in CRM marketing trainee store.
Tom Brown: And the factories, a plasma in personalization and the bulk of the year.
Tom Brown: We are keep where we are.
Tom Brown: <unk> to keep on making the investments.
Tom Brown: And we are expecting to see the full results.
Tom Brown: After 25 on the senior brand, adding in mind that our.
Tom Brown: When we declared a 15% adjusted margin that is at least number.
Tom Brown: Dania should land.
Tom Brown: Definitely not this year, but going forward.
Tom Brown: Perfect I don't know if this was clear case and the liner was working now on Tom Brown and the product that's ultimate evolution to our C. P. J I think that.
Tom Brown: And we have seen a significant improvement of the brothers evolution.
Schuler: <unk> Schuler.
Brandon: Sure Brandon.
Schuler: Ken just find ourselves in.
Schuler: Not to say, we typically before was that other classical approach I think Tom what I mean is there.
Schuler: Has moved ahead then taken.
Schuler: Boulder, but still commercial approach so how.
Schuler: He wants.
Schuler: Product to look sure in the showroom and now he says further in the store. So I think that we see.
Schuler: The south Anthony in the assortment in the store for summer 'twenty, five, but it will be even stronger portfolio into 25, both in men's and women.
Schuler: They show.
Schuler: Really did highlight these transformation before from a more tactical.
Schuler: Very creative Shaw tool.
Schuler: A more.
Schuler: And at least seek.
Schuler: Shows that you like to see.
Schuler: What.
Schuler: Yes, Sean.
Schuler: The store.
Schuler: A lot of time with alopecia car.
Schuler: Both men and women so.
Schuler: I think we need to see some traction in particular for the fall winter season in terms of market their salaries.
Schuler: Japan is super Sol.
Schuler: I think that regardless of the Chinese whether they they may choose to.
Schuler: Japan are involved.
Speaker Change: Tom Brown, our mainstay brand for the long haul. So we are doing extremely well with the local and the Chinese government.
Speaker Change: Sure sure.
Schuler: One of them.
Schuler: Korea, we are doing with <unk>.
Schuler:
Schuler: And so these are the two market that U S show satisfaction County, Florida, and a kid doing.
Schuler: Doing well for 'twenty.
Schuler: 25.
Schuler: China has some small signs pause.
Schuler: The new side.
I think we are desperately get bought during last year.
Schuler: I think we see some positive traction I think that.
Schuler: It has to do also with the support of our assortment.
Schuler: In which we made.
Schuler: I mean from it.
Schuler: They call the classic.
Schuler: Taking a full bar into a more fashion.
Schuler: Australia, and commercial and distinctive items.
Schuler: I think that our inroads in those states that are important and I mean, what I've indicated is opening more stores.
Schuler: It means that we do believe.
Schuler: This tastes market so for somewhere around any particular, Tom wants to strengthen his position there and so anything that we should see some improvement there as well.
Schuler: And then I think that.
Schuler: A push towards retaining anymore meeting, which you know we've been working toward a new associate both in 'twenty four and obviously in 'twenty five.
Schuler: Thank you.
Schuler: Okay.
Speaker Change: Handful off I can go through the second set of questions.
Schuler: All clear thank you.
Speaker Change: Thank you.
Schuler: Operator.
Schuler: The second.
Speaker Change: Thank you. Our next question comes from Adrienne <unk> with Goldman Sachs.
Schuler: Please go ahead.
Speaker Change: Hey, good afternoon. Thank you very much for taking my questions.
Speaker Change: So the first one would be if you can come into a bit more on the guidance, maybe where do you see the growth opportunity.
Speaker Change: In China, and if you can tell that for the different brands I know you've already commented that you were.
Speaker Change: Negative trends for the region in 'twenty five, but maybe if you can comment on your expectation a bit further from this.
Speaker Change: And then the second question would be on Tom towards fashion.
Speaker Change: Gration progressing compared to your expectations and what scope do you see for continued expansion.
Speaker Change: And the third question, if I may on the <unk>.
Speaker Change: Mix sort of group has materially lowered your exposure to the wholesale channel.
Speaker Change: Do you expect the rationalization activity to now be largely compete.
Tom Brown: I understood correctly, you still expect double digit down the wholesale for Tom Brown next.
Speaker Change: Next year.
Speaker Change: What about the other brands. Thank you very much.
Speaker Change: Okay, So I'll take that.
Speaker Change: First question is on that.
Speaker Change: 2027 target guidance.
Speaker Change: Hey, Dan.
Speaker Change: And about the opportunities.
Speaker Change: Implied in the guidance that you know, particularly when looking at trying to correct that.
Speaker Change: Okay that makes.
Speaker Change: Makes sense.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Right.
Speaker Change: That's targeted.
Speaker Change: Target for China.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Then.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Operator, we are experiencing some audio issues from the management teams line. Please standby, while we attempt to resolve the issue.