Half Year 2026 OVS SpA Earnings Call

September 24, 2026

Operator 5: You start bleeding, I start screaming. The first cut won't hurt at all. The second only makes you wonder. The third will have you on your knees. You start bleeding, I start screaming. The first cut won't hurt at all. The second only makes you wonder. The third will have you on your knees. You start bleeding, I start screaming. The first cut won't hurt at all. The second only makes you wonder. The third will have you on your knees. You start bleeding, I start screaming.

Speaker #1: You start bleeding. I start screaming. The surprise won't hurt at all. The second only makes you wonder. The third will have you on your knees.

Speaker #1: You start.

Speaker #2: I could be less attached than I was, knowing, and knowing fallen leaves in the night took his air, and it glowing as free as the wind.

Speaker #2: Oh, fully learning what it means and knowing, turning more than this, we—

Speaker #3: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the OVS first half 2026 financial results conference call. As a reminder, all participants are in listen-only mode.

Operator: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the OVS H1 2026 financial results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Stefano Beraldo, CEO of OVS. Please go ahead, sir.

Speaker #3: After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero (*) and 0 on their telephone.

Speaker #3: At this time, I would like to turn the conference over to Mr. Stefano Beraldo, CEO of OVS. Please go ahead, sir.

Speaker #4: Thank you. Good morning to everyone, and thank you for attending this conference. I will make the story short—it has been a good quarter, more or less in line with the first quarter.

Stefano Beraldo: Thank you. Good morning to everyone. Thank you for attending this conference. I will make the story short. It has been a good quarter, more or less in line with the Q1. So good momentum for all the brands of the company, for all the brands inside of OVS, like Piombo, like Le Coq Sportif, like Altavia, like Utopja, each of them with its own peculiarity, which is one of the reasons when people ask me, "How can you manage in such a challenging market to continue to perform so well?" The answer, I think, is the strategy. The strategy and the way the strategy is implemented. The brands inside OVS are more and more positioning OVS as an ideal place to come, to visit, and to expect to receive a good answer to different needs.

Speaker #4: So, good momentum for all the brands of the company, for all the brands inside OVS, like Piombo, like Le Coupin, like Altavia, like Utopia.

Speaker #4: Each of them has its own peculiarity, which is one of the reasons why, when people ask me, "How can you manage, in such a challenging market, to continue to perform so well?" The answer, I think, is the strategy.

Speaker #4: The strategy, and the way the strategy is implemented—the brands inside OVS are more and more positioning OVS as an ideal place to come to visit and to expect to receive good answers to different needs.

Speaker #4: So Utopia, for instance, is growing and will continue to grow, attracting Generation Z, who five years ago were not even considering OVS as a place to be visited.

Stefano Beraldo: Utopja, for instance, is growing, will continue to grow, attracting Generation Z, which five years ago were not even considering OVS like a place to be visited. Altavia, I am receiving telephone calls from France asking me, "When Altavia ski apparel will enter in the store, because we are waiting. Are you still making Altavia ski?" And I say, "Yes. Wait one month. And in one month you will find Altavia ski." We have people that visit OVS only because they love Piombo, and they have expectation like it is a luxury brand. They wait for the new collection. And similarly, Le Coq Sportif is justifying a higher price positioning simply because people perceive that it is well done, but also is a brand.

Speaker #4: Altavia, I'm receiving telephone calls from friends asking me, "When will Altavia ski apparel enter the store?" Because we are waiting. Are you still making Altavia ski?

Speaker #4: And I say, "Yes, wait one month." And in one month, you will find Altavia ski. We have people that visit OVS only because they love Piombo, and they have expectations like it is a luxury brand.

Speaker #4: They wait for the first release of the new collection. Similarly, Le Coupin is justifying a higher price positioning simply because people perceive that it is well done, but also because it is a brand.

Speaker #4: So the fact that we have brand inside our assortment is really the reason why our positioning is benefiting, I think, more than others—at least in the Italian market.

Stefano Beraldo: The fact that we have brand inside our assortment is the reason why our positioning is benefiting, I think, more than other, at least in the Italian market, and generating a good result. Very good 6 months, good profitability, cost under control, a lot of new initiatives that are giving good results. The one of you that lives in Milan might have seen last week incredible amount of number of people making queue, waiting to be admitted to our Shaka event. We had almost 20,000 people visiting Shaka, and I think 40 million impressions in Italy across the country regarding this event. We opened the second small, I call luxury OVS store, a small store in the middle of Trento to offer the best of our collection, and the store is doing very well. We have still gasoline in the engine, and ideas.

Speaker #4: And generation is a good result. So, a very good six months: good profitability, costs under control, and a lot of new initiatives that are giving good results.

Speaker #4: Those of you that live in Milan might have seen last week an incredible number of people queuing, waiting to be admitted to our Sciacca event.

Speaker #4: We had almost 20,000 people visiting Sciacca, and I think 40 million impressions in Italy across the country regarding this event. We opened the second small, what I call luxury OVS store—a small store in the middle of Trento.

Speaker #4: To offer the best of our collection, and the store is doing very well. So we still have gasoline in the engine and ideas, so I think that also the second half will benefit from all the good things that we are doing in terms of product innovation and opening new stores. So everything is doing very well.

Stefano Beraldo: I think that also the H2 will benefit from all the good things that we are doing in term of product innovation and opening new stores. Everything is doing very well. The market is finally stable, or slightly increasing. Happy to say that in the last maybe 24 months, we are not assisting anymore to the continual decrease and shrinking of the market. The market hopefully now has found its bottom line, and in this bottom line, we continue to benefit from the general trading down. More and more people also looking at our focus group and market research are trading down and deciding to find in OVS what maybe 10 years ago they only found in Zara. Finally, we are an alternative for many customer to Zara, and they declare when we ask what they think about OVS.

Speaker #4: The market is finally stable—well, slightly increasing. I'm happy to say that, in the last maybe 24 months, we are continuing the trend of continual decrease and shrinking of the market.

Speaker #4: The market hopefully now has found its bottom line. And at this bottom line, we continue to benefit from the general trading down. So more and more people—also looking at our focus group and marketing research—are trading down and deciding to find in OVS what maybe 10 years ago they only found in Zara.

Speaker #4: So, finally, we are an alternative for many customers to Zara, and they declare, when we ask what they think about OVS—when we make this survey, we speak with thousands of people—and they like what we do, and they are ready also, as I told last week... no, it was the day before yesterday, to the Milan Finanza Fashion Week conference.

Stefano Beraldo: When we make this survey, we speak with thousands of people, and they like what we do, and they are ready also, as I told last week. No, it was the day before yesterday to Milano Finanza Fashion Week conference. I told what is true. People is asking us also to increase prices because they are ready to pay for sweat jacket more. The best item, which is out of stock today, is the sweat jacket. But the price of the sweat jacket is EUR 190. And 10 years ago, OVS maximum price may be EUR 60. This is why OVS is changing, and this is why OVS is performing well, I think. I think better I stop, and I hand the word to Francesco.

Speaker #4: I told what is true. People are asking us also to increase prices because they are ready to pay more for the sweat jacket. The best item, which is out of stock today, is the sweat jacket.

Speaker #4: But the price of the sweat jacket is €190. And 10 years ago, OVS's maximum price was maybe €60. This is why OVS is changing, and this is why OVS is performing well, I think.

Speaker #4: I think it's better if I stop now and hand the word to Francesco.

Speaker #2: Thank you, Stefano. I will start with page number four and ISQs for the quantity of numbers in this slide. But it was necessary, a little bit, only this slide, to explain also the performance with and without the integration of Goldenpoint, that I remember started the 1st of July last year.

Francesco Leoncini: Thank you, Stefano. I will start with page number 4, and I excuse for the quantity of numbers in this slide, but it was necessary a little bit only this slide is to explain also the performance with and without the integration of Goldenpoint that I remember started the 1 July last year. Last year was consolidated for just one month, but the best month within the semester for Goldenpoint, and this year for the full 6 semesters. In the higher part of the table, we see the reported results with net sales increasing 11%, composed of a 3% like-for-like trend in OVS and Upim, and an additional 3% organic growth within the iso-perimeter, or let me say, the perimeter excluding Goldenpoint, and then, of course, the addition of Goldenpoint for the full semester.

Speaker #2: So, last year was consolidated for just one month, but it was the best month within the semester for Golden Point, and this year, for the full six semesters.

Speaker #2: So, in the higher part of the table, we see the reported results with net sales increasing 11%, composed of a 3% like-for-like trend in OVS and UPIM and an additional 3% organic growth within the isoperimeter—or let me say, the perimeter excluding Golden Point—and then, of course, the addition of Golden Point for the full semester.

Speaker #2: So, in terms of absolute sales, we are close to €900 million, and hopefully, moving forward in the next years, we could touch the €1 billion mark per semester.

Francesco Leoncini: In terms of absolute sales, we are close to EUR 900 million, so hopefully, moving forward in the next years, we could touch EUR 1 billion per semester. The gross margin is improving as expected, driven by the EUR/USD improved exchange rate in spring-summer 2027 vis-a-vis the spring-summer 2026. Also thanks to the operating leverage, the EBITDA is increasing by EUR 12.5 million, reaching 13% of revenues. Then going down to EBIT profit before tax and net income. On the view without Goldenpoint, we already commented the trend in sales, and this has an even more visible impact in terms of operating leverage, driving an EBITDA growth of EUR 17 million and an EBITDA percentage of 13.8%.

Speaker #2: The gross margin is improving as expected, driven by the Euro-Dollar improved exchange rate in Spring/Summer '27 vis-à-vis Spring/Summer '26. And so, also thanks to the operating leverage, the EBITDA is increasing by €12 million to €12.5 million, reaching 13% of revenues.

Speaker #2: And then, going down to EBIT, profit before tax, and net income. On the due without Golden Point, we already commented on the trend in sales.

Speaker #2: And this has an even more visible impact in terms of operating leverage, driving EBITDA growth of €17 million and an EBITDA percentage of 13.8%.

Speaker #2: So as a difference, the numbers of Golden Point see, first of all, a positive EBITDA of €200,000. While in the same six-month period of 2025, the company had a negative €4.2 million EBITDA.

Francesco Leoncini: As a difference, the numbers of Goldenpoint, see, first of all, a positive EBITDA for EUR 200,000, while in the same six-month period of 2025, the company had a -4.2 million EBITDA. So the improvement is really material and, projecting this improvement somehow also on the second semester, we could reach more or less EUR 3 million to EUR 4 million EBITDA on the full year. Of course, the comparison with last year is difficult because last year we had just the month of July, so little sales, but very high EBITDA because the EBITDA generation is concentrated in a few months across the year, namely July, August, and then November, December, which are the peaks for the seasonality of Goldenpoint. I move to page 5, where we open more the performance between channels and brands.

Speaker #2: So, the improvement is really material, and projecting this improvement somehow also onto the second semester, we could reach more or less €3–4 million EBITDA for the full year.

Speaker #2: Of course, the comparison with last year is difficult because last year we had just a month of July, so little sales but very high EBITDA, because the EBITDA generation is concentrated in a few months across the year, namely July, August, and then November, December, which are the peaks for the seasonality of Golden Point.

Speaker #2: I move to page number five, where we open more on the performance between channels and brands. With all plus signs, we grew both on directly operated stores and on the franchising B2B channel.

Francesco Leoncini: With all plus signs, we grew both on directly operated stores and on the franchise and B2B channel. We grew both in OVS and in Upim. If we look bottom right to the EBITDA margin, we see very high number because OVS reaches 15.1% EBITDA margin, which is among the best of the industry. Also Upim is very close to 12% after having been around 10% a couple of years ago, so showing a long-term trajectory of improvement. Page 6, we move to the financial side of the results with a trade working capital pretty stable. We are continuously reducing and improving the receivables also as a consequence of the shift towards the consignment model, for which we hold the ownership of the stock until the moment of the sale to the final customer.

Speaker #2: We grew both in OVS and in UPIM, and if we look at the bottom right at the EBITDA margin, we see a very high number because OVS reaches a 15.1% EBITDA margin, which is among the best in the industry. Also, UPIM is very close to 12%, after having been around 10% a couple of years ago.

Speaker #2: So, showing a long-term trajectory of improvement. Page number six, we move to the financial side of the results, with trade working capital pretty stable.

Speaker #2: We are continuously reducing and improving the receivables also as a consequence of the shift towards the consignment model, for which we hold the store ownership of the stock until the moment of the sale to the final customer. Then, of course, it reduces the payment terms from the client that has already cashed in from the final customer.

Francesco Leoncini: Then of course, it reduces the payment terms from the client that had already cashed in from the final customer. The big movements are of opposite sign on inventory and trade payables, mostly driven by the EUR/USD that is reducing the amount of the value of the stock on one side, and in the short term, also reducing the amount of payables towards the suppliers. On the stock, we also have some material decrease in absolute terms, both on old stock, thanks to special actions, and on the current collection that moved quicker than usual. So the sell-out as of 31 July, which still does not include the last month of sales, was very high.

Speaker #2: The big movements are of opposite sign on inventory entry payables, mostly driven by the Euro-dollar. That is reducing the amount of stock—the value of the stock—on one side and, in the short term, also reducing the amount of payables toward the suppliers.

Speaker #2: On the stock, we also have some material decrease in absolute terms, both on old stock thanks to special actions and on the current collection that moved quicker than usual.

Speaker #2: So, the sell-out as of July 31st—which still does not include the last month of sales—was very high, and so we had this improvement.

Francesco Leoncini: And so we had this improvement. While on trade payables, we also have some phasing effects that reduced the total amount of trade payables, of course, to the benefit of the cash generation in the medium term. Page 7, capital expenditures. In the H1, including also within these numbers, the inclusion of Goldenpoint that is undertaking a strong investment plan to refurbish all the stores. So in all the cities, I think that already the most visible stores of Goldenpoint have been already refurbished to the new format. Then, of course, continuing catching the opportunity to open additional stores both in Italy and abroad. In the H1, we opened the second store in India. So in the Q2, and is already represented here, the second store in India. In Q3, we will see the numbers also for Dubai.

Speaker #2: While on trade payables, we also have some phasing effects that reduced the total amount of trade payables—of course, to the benefit of cash generation in the medium term.

Speaker #2: Page number seven, capital expenditures. In the first semester, including also within these numbers the inclusion of Golden Point, that is undertaking a strong investment plan to refurbish all the stores. So, in all the cities, I think that already the most visible stores of Golden Point have been already refurbished to the new format.

Speaker #2: And then, of course, continuing to catch the opportunity to open additional stores both in Italy and abroad—in the first semester we opened the second store in India in the second quarter, and as already represented here, the second store in India. In Q3, we will see the numbers also for Dubai.

Speaker #2: So basically, in building the rationales, the foundations for further profitable growth in the future. Page number eight is the cash flow. The first half is structurally a cash absorption period.

Francesco Leoncini: So basically in building the rationals, the foundations for further profitable growth in the future. Page 8 is the cash flow. The H1 is structurally a cash absorption period, with the H2 instead very positive. But the element to point out is that overall, the cash generation improves by EUR 15 million versus last year. It is mostly driven not by temporary or phasing elements, but by the increase in EBITDA, EUR 12.5 million out of the EUR 15 million. Then the discipline and the good performance also on working capital. Page 9 is the picture of this improvement in cash generation with the net debt that reduces by EUR 54 million versus last year, despite also the fact that we increased the amount of cash released somehow to the shareholders through dividends and buyback. Otherwise, the improvement would have been even higher.

Speaker #2: While the second half is instead very positive, the key element to highlight is that overall cash generation improved by €15 million versus last year.

Speaker #2: And it is mostly driven not by temporary or phasing elements, but by the increase in EBITDA: €12.5 million out of the €15 million. And then the discipline and the good performance also on working capital.

Speaker #2: Page number nine is the picture of these improvement in cash generation. With the net debt that reduces by 54 million versus last year despite also the fact that we increased the amount of cash released somehow to the shareholders through dividends and buyback.

Speaker #2: So otherwise, the improvement would have been even higher. The leverage ratio, in whatever way we would like to see it, is very safe because it is 1.1 versus the EBITDA.

Francesco Leoncini: The leverage ratio, in whatever way we would like to see it, is very safe, because it is 1.0, 1.1 versus the EBITDA. Also, the treasury shares that we now already have in the portfolio is above the 5% value as of end of September. I conclude on page 11 with the current trading and the outlook. As said by Stefano Beraldo at the beginning, the Q2 started, especially the full winter season, in the H2. The full winter season started in a good way, in line with the last two seasons that were very robust. In addition, the margin will further benefit of the EUR/USD comparison for winter 2026 versus for winter 2025. Operating costs are under control as part of the DNA of OVS. So we expect to further improve the results also in the H2 of the year compared to 2025.

Speaker #2: Also, the treasury shares that we now already have in the portfolio are above the 5% value as of the end of September. I conclude on page 11 with the current trading and the outlook.

Speaker #2: As said by Stefano at the beginning, the second quarter started, especially the fall/winter season in the second half. The fall/winter season started in a good way, in line with the last two seasons that we had, which were very robust.

Speaker #2: In addition, the margin will further benefit from the Euro-Dollar comparison for Fall/Winter 2026 versus Fall/Winter 2025. Operating costs are under control, as this is part of the DNA of OVS.

Speaker #2: And so, we expect to further improve the results also in the second half of the year compared to 2025. Thank you very much, and we are open to your questions.

Francesco Leoncini: Thank you very much, and we are open to get your questions.

Speaker #1: Thank you. This is the Coruscal Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Francesco Brilli, Intermonte.

Speaker #1: To remove yourself from the question queue, please press star and two. We kindly ask you to use handsets when asking questions. Anyone who has a question may press star and one at this time.

Speaker #1: The first question is from Francesco Brilli, Intermonte.

Speaker #3: Yes, good evening. Can you hear me?

Francesco Brilli: Yes, good evening. Can you hear me?

Speaker #2: Yes. We can hear you.

Francesco Leoncini: Yes, we can hear you.

Speaker #3: Yes. We hear you.

Operator: Yes, we hear you.

Stefano Beraldo: Yes, we hear you.

Speaker #2: Okay. Thanks.

Speaker #3: Okay, thank you. Thanks for taking my question. It's a congratulations for the very robust set of results. Three questions: the first one is on margins.

Francesco Brilli: Okay, thanks. Thank you. Thanks for taking my question, and congratulations for the very robust set of results. I have three questions. The first one is on margins. Organic growth margin was up above 100 bps in H1. It was supported, as you mentioned, by FX, but also the mix and sourcing. I was wondering if you could help us understand how much of these improvements are structural. Do you think going forward, particularly looking into 2027, when the FX component and contribution could normalize? The second one is on Goldenpoint. Very positive performance, EBITDA positive, high growth, and the profitability improving quickly. Given this stronger than expected, I would say, performance of Goldenpoint, has your view on this for the medium term changed? What are your targets for this line going forward?

Speaker #3: So, organic gross margin was up by more than 100 basis points in H1. It was supported, as you mentioned, by FX, but also by the mix and sourcing.

Speaker #3: So I was wondering if you could help us understand how much of these improvements are structural, and do you think going forward—particularly looking into 2027, when the FX component and contribution could normalize?

Speaker #3: The second one is on Golden Point. Very positive performance. EBITDA positive high growth. And the profitability improving quickly. So given these stronger than expected I would say performance of Golden Point.

Speaker #3: So, your view on these for the medium term has changed? What are your targets for these lines going forward? And the third one is a little bit more strategic, I would say.

Francesco Brilli: The third one is a little bit more strategic, I would say. On organic sales, you grew 6% in H1 against the market growing 1.5% in the Italian market. It is several years that you are growing above the market, so gaining shares. As of today, what gives you the confidence of continuing to structurally outperform the market? You mentioned a little bit during the initial remarks, but I wonder if you can elaborate a little bit more on this. Thank you.

Speaker #3: So, on organic sales, you grew 6% in H1, against the market growing 1.5% in the Italian market. So, it's several years that you are growing above the market.

Speaker #3: So, gaining shares. As of today, what gives you the confidence to continue to structurally outperform the market? You mentioned this a little bit during your initial remarks, but I wonder if you could elaborate a bit more on this.

Speaker #3: Thank you.

Speaker #2: Yes. Thank you, Francesco. Francesco, will give answers on the first two elements, and then Stefano will close up on the strategic one.

Francesco Leoncini: Yes. Thank you, Francesco. Still Francesco giving back answer on the first two elements, and then, of course, Stefano will close up on the strategic one. The improvement in the margin is higher on the consolidated figures because of the higher margin of Goldenpoint, which has a business model conceived around smaller stores with higher margin, higher store costs. This is an improvement that we will see more and more as long as Goldenpoint will be part of the company for the full period. Another element, of course, is that the EUR/USD has been already covered at good ratios, of course, in summer 2027. So also the look on 2027 sees a good coverage, and we are now, of course, in the process of approaching full winter 2027. So there are not organic elements in the margins that are represented in H1 2026.

Speaker #2: The improvement in the margin is higher on the consolidated figures because of the higher margin of Golden Point, which has a business model conceived around smaller stores with higher margin, higher store costs. So, this is an improvement that we will see more and more as long as Golden Point will be part of the company for the full period.

Speaker #2: Another element, of course, is that the Euro-dollar has already been covered at good ratios for Spring/Summer '27. So also, the outlook on 2027 sees good coverage, and we are now, of course, in the process of approaching Fall/Winter '27.

Speaker #2: So, there are no organic elements in the margins that are represented in H1 2026. No bounce-back of tariffs in the US, just to name one element that other companies in the industry are reporting now.

Francesco Leoncini: No bounce back of tariffs, US, just to name one element that other companies in the industry are reporting now. Of course, the medium-term gross margin on the organic perimeter is supposed to be plus, slightly above the 60%, 61% as shown. On Goldenpoint, we are very proud of the results achieved so far. Of course, it is not that we are aiming at bringing Goldenpoint at breakeven. We are aiming at bringing Goldenpoint to an EBITDA margin of 12%, 13% as the rest of the group. Of course, this is a trajectory. We do not achieve everything in the first six months. The trajectory is positive. There are things that were implemented, things that are still for next year. For instance, we still do not look to collant and socks. That will be a topic for improving the performance next year.

Speaker #2: And so this is the and of course the medium term gross margin on the organic perimeter is supposed to be plus slightly above the 60% 61% as shown.

Speaker #2: At Golden Point, we are very proud of the results achieved so far. But of course, it's not that we are aiming to bring Golden Point to break-even.

Speaker #2: We are aiming at bringing Golden Point to an EBITDA margin of 12–13%, as with the rest of the group. Of course, this is a trajectory.

Speaker #2: We do not achieve everything in the first six months, and so the trajectory is positive. There are things that were implemented, and things that are still for next year.

Speaker #2: For instance, we still did not look to call Lantern Socks; that will be a topic for improving performance next year. And so, this is the view on Golden Point.

Francesco Leoncini: This is the view on Goldenpoint. It will require additional one or a couple of 2 years, let me say, to be at regime also on this acquisition. But, I would say, as we say in Italian, the good day we see from the morning. At least the morning was positive on Goldenpoint.

Speaker #2: It will require an additional one or two years, let me say, to be at regime also on these acquisition. But I would say, as we say in Italian, if the good day we see from the morning—I mean, at least the morning was positive on Golden Point.

Speaker #3: Regarding the question about how to continue to outperform the market, I think that, first of all, I would like to remind you that 6% organic growth doesn't mean 6% like-for-like.

Stefano Beraldo: Regarding the question about how to continue to outperform the market, I think that first of all, I would like to remember that 6% organic growth doesn't mean 6% like-for-like. Organic growth means the growth of OVS, including opening new stores. We mean organic because we want to distinguish from other aspect, like the acquisition of Goldenpoint. But within this 6%, I am happy to say that 3%, 3.5%, more or less, is like-for-like growth. It is true that we are continuing growing like-for-like in the last 4 or 5 years. This will continue, in my opinion, from a rational point of view because of a couple of important elements. The most important element is that OVS is still underrepresented in the segment of the women compared to the market.

Speaker #3: Organic growth means the growth of OVS, including opening new stores. We say organic because we want to distinguish it from other aspects, like the acquisition of Golden Point.

Speaker #3: But within this 6%, I'm happy to say that around 3.5% is more or less like-for-like growth. And it is true that we are continuing to grow like-for-like over the last four or five years.

Speaker #3: This will continue, in my opinion, from a rational point of view because of a couple of important elements. The most important element is that OVS is still underrepresented in the women's segment compared to the market.

Speaker #3: The importance of the women's segment in the market is 55%, I think, while within OVS it is below 40%. It is growing year after year.

Stefano Beraldo: The importance of the women segment in the market is 55%, I think, while within OVS, it is below 40%, growing year after year. OVS in the past was exaggerated in the size of the kid, which was a point of strength. But with the decrease of birth rate, it was a risk for us. So that is why we are super happy in noticing that the investment made in the brand and in strengthening also our product development style department, design department, creativity, is the reason why the women is growing more than other segment. So we are continuing season after season to give more space within the store to the women, to the detriment of the kids. We are noticing that in spite of this, kids sales remain very robust, very solid. We are not losing like-for-like in kids.

Speaker #3: OVS in the past was exaggerated in the size of the kid, which was a point of strength. But with the decrease of birth rate, it was a risk for us.

Speaker #3: So that's why we are super happy in noticing that the investment made in the brand, and in strengthening also our product development—has tied department design department creativity—is the reason why the women's segment is growing more than other segments.

Speaker #3: So, we are continuing season after season to give more space within the store to women, to the detriment of kids, and we are noticing that, in spite of this, kid sales remain very robust, very solid.

Speaker #3: We are not losing like-for-like sales. We are maintaining the same sales, the same turnover as one year before, by increasing the sales density.

Stefano Beraldo: We are maintaining the same turnover than one year before by increasing the sales density. While in the women, we are growing. What will happen in the future, first of all, the great success of the change of the style within B.Angel is attracting younger customers, very often the same young lady which are buying Shaka skincare and makeup product. So with a very healthy cross-merchandising, cross-fertilization within the company. Next year, we will almost double the number of SKUs in B.Angel, on the back of the success that B.Angel is generating this year. We will increase the space dedicated to Le Coq Sportif, which is today the brand whose sales density is the highest within our assortment. Utopja will increase again because this year Utopja is making like +15%, +20% like-for-like, and we will dedicate more space to Utopja.

Speaker #3: While in the women we are growing, and what will happen in the future, first of all, the great success of the change of the style within B Angel is attracting younger customers. Very often, the same young ladies who are buying Shaka skincare and makeup products, so with a very healthy cross-merchandising and cross-fertilization within the company.

Speaker #3: Next year, we will almost double the number of SKUs in B Angel, on the back of the success that B Angel is generating this year.

Speaker #3: We will increase the space dedicated to Lecopen, which is today the brand whose sales density is the highest within our assortment. Utopia will increase again, because this year Utopia is making plus 15, plus 20 percent like-for-like, and we will dedicate more space to Utopia again. The younger generation, which in the past were not looking at OVS, and also Altavia, represents a further element of attraction for new customers that were not considering OVS when they had to buy technical and sporting goods at affordable prices.

Stefano Beraldo: Again, younger generation, which in the past were not looking at OVS. Altavia represents a further element of attraction for new customer that were not considering OVS. Once they had to buy technical and sporting goods at affordable prices, now they have also OVS as an alternative maybe to Decathlon. Last but not least, within OVS, the beauty department, which cannot promise the recent historical performance of double-digit growth in the last 3 years, will continue to grow more modestly, but will continue to grow. On the other side, speaking the second biggest portion of our business, Upim, is growing. Croff is growing in this moment by 13% to 14% like-for-like. There is a lot of space for new opening of Croff stores, whose profitability has become very interesting.

Speaker #3: And now they also have OVS as an alternative, maybe to Decathlon. Last but not least, within OVS, the beauty department—which cannot promise the recent historical performance of double-digit growth in the last three years—will continue to grow more modestly but will continue to grow.

Speaker #3: On the other side, speaking about the second biggest portion of our business, Upim is growing. Cross is growing at this moment by 13–14% like-for-like. There is a lot of space for new openings of Cross stores, whose profitability has become very interesting.

Speaker #3: And Upim itself, just this year we opened seven or eight stores, and we have a run rate for 2027 of about €40 million in new turnover.

Stefano Beraldo: Upim itself, just this year, we opened 7, 8 store, and we have a run rate for 2027 of about EUR 40 million of new turnover due to the new openings of Croff and Upim, which this year represents EUR 20 million. So we have another EUR 20 million additional turnover only from Upim expected next years. These are the main elements why we believe, but the most important is women. The increase of the women department, thanks to the great appreciation that in this moment, the Italian women are having versus our collections.

Speaker #3: Due to the new openings of Cross and Upim, which this year represent €20 million. So, we have another €20 million additional turnover only from Upim expected next year.

Speaker #3: So these are the main element why we believe that the most important is women. The increase of the women department thanks to the great to the great appreciation that in this moment the Italian women are having versus the our collections.

Speaker #1: That's very, very helpful. Thank you.

Francesco Brilli: That's very helpful. Thank you.

Speaker #2: The next question is from Domenico Gilotti, Equita.

Operator: The next question is from Domenico Ghilotti, Equita.

Speaker #1: Good afternoon. I have a few questions. The first is a follow-up on your comments regarding sales performance. If I understand correctly, the women's category is the main driver.

Domenico Ghilotti: Good afternoon. A few questions. The first is a follow-up on your comments on the sales performance. If I understand clearly, the women category is the main driver. You mentioned resilient kids. If you can also give us the sense on the men collection. If you can also give a sense on the metrics, what is driving the like-for-like? Is it more traffic, as you said, more conversion, or higher ticket? The second question is on the operating cost in the sense that you were mentioning that you are typically well structured to manage and to keep costs under control. I saw quite significant increase in the H1. On an organic basis, I calculate like EUR 20 million higher operating costs, so between gross margin and EBITDA. I wanted to have some comments from you.

Speaker #1: You mentioned a resilient kid. So, if you can also give us a sense on the men collection, and if you can also give a sense on the metrics, what is driving the life? Is it more traffic, as you said, more conversion, or higher ticket?

Speaker #1: The second question is on the operating cost, in the sense that you mentioned you are typically well structured to manage and keep costs under control.

Speaker #1: I saw a quite significant increase in the first half. So, on an organic basis, I calculate something like €20 million higher operating cost. So, between gross margin a bit, and so, I wanted to have some comments from you.

Speaker #1: And the last just a clarification on the current trading when you say that you are say in line with last year. So we have to assume that so far quarter to date you are more or less flattish with last year level and you are expecting a pick up as soon as let's say the weather condition are a bit less adverse.

Domenico Ghilotti: The last, just a clarification on the current trading when you say that you are in line with last year. We are to assume that so far, quarter to date, you are more or less flattish with last year level, and you are expecting a pickup as soon as, say, the weather condition are a bit less adverse. Correct?

Speaker #1: Correct?

Speaker #3: Okay, so thank you, Domenico, for your question on the women. What I can say is that the increase of the like-for-like performance is more or less equally spread between traffic, average ticket, and conversion.

Stefano Beraldo: Okay. Thank you, Domenico, for your question. On the women, what I can say is that the increase of the like-for-like performance is more or less equally spread between traffic, average ticket, and conversion. Traffic is growing the most. We have about 2% of traffic increase. We have another 0.5%, more or less, number of items per ticket, and also the average price increase is contributing to the growth. Average price increase, which is not applicable to the kids because we want to maintain a very competitive presence in this segment. We don't want to lose the franchise that we have been able to create with the Italian families. The price has been increased mostly in Le Coq Sportif, and also partially in Piombo.

Speaker #3: Traffic is growing the most. We have about a 2% increase in traffic. We have another 0.5% more or less in the number of items per ticket, and also the average price increase is contributing to the growth.

Speaker #3: The average price increase does not apply to the kids' segment because we want to maintain a very competitive presence there. We don't want to lose the franchise that we have been able to create with Italian families.

Speaker #3: But the price has been increased mostly in Lecopen, and also partially in Piombo, and I think that we will continue to operate in this way. Because, as I said before, our customers are now ready, because they know that we represent probably the best price-to-quality combination in the Italian market and also in fashion.

Stefano Beraldo: I think that we will continue to operate in this way, because as I said before, our customers are now ready because they know that we represent probably the best price to quality combination in the Italian market, and also fashion. I would say price, quality, fashion combination in the Italian market. They are asking us to introduce more linen, more wool. For instance, we introduced a much higher amount of cashmere this year compared to the past. The growth in the women will be sustained by all these elements, I think. Traffic, conversion, and price also, hopefully in the future. On the men, we didn't mention simply because it was in between. As of now, in the 8 months to date, basically, including the beginning of September, 8 months to date, the women is growing like-for-like 5%, something like that.

Speaker #3: I would say price, quality, fashion combination in the Italian market. They are asking us to introduce more linen, more wool; for instance, we introduced a much higher amount of cashmere this year compared to the past.

Speaker #3: So, the growth in the women's segment will be sustained by all these elements—I think traffic, conversion, and price also, hopefully in the future. On the men's segment, we didn't mention it simply because it was in between. So, as of now, in the eight months to date, basically including the beginning of September—nine months, eight months to date—the women's segment is growing like-for-like about 5%, something like that.

Speaker #3: The men's segment is growing by about 2%, maybe something like that, and kids is more or less flattish. Which is very good considering the new entrance of players like Pepco and Primark, which are super aggressive in kids, and considering the decrease in the birth rate.

Stefano Beraldo: The men is growing like 2%, maybe something like that, and kids is more or less flattish, which is very good considering the new entrants of a player like Pepco and Primark, which are super aggressive in kids, and considering the decrease of the birth rate. Let me answer on the last question, because I want to leave the operating cost question to Francesco. The last question regarding the current trading, why we are positive? Because if you ask to the Artificial intelligence, which has been the temperature in Italy in the H1 of September, and you compare with last year. The answer, unfortunately, will be that the temperature has been higher compared to the very high temperature of last year. This month, this beginning of autumn/winter, started, from a weather point of view, worse than expected.

Speaker #3: Let me answer the last question, because I want to leave the operating cost question to Francesco. The last question was regarding the current trading.

Speaker #3: Why are we positive? Because if you ask artificial intelligence what the temperature has been in Italy in the first half of September, and you compare it with last year, the answer unfortunately will be that the temperature has been higher compared to the very high temperature of last year.

Speaker #3: So this month, this beginning of autumn and winter started, from a weather point of view, worse than expected. And being able to confirm the good results of the last two years means that the expectation for the next coming days became good.

Stefano Beraldo: Being able to confirm the good results of the last two years means that the expectation for the next coming days became good. We know that in certain latitude where weather has not been that impactful, the new collection has been appreciated very well. For sure, we have a mix of heavyweight which can be improved compared to the weather situation that year after year became warmer. Because only in the last couple of days, we have seen in the morning the temperature going below 20, and because we see from north of Italy that the reaction is already very good, while in the south, the temperature still didn't change that much. We are convinced that in principle, there are all the elements why to think that October and November will be positive.

Speaker #3: We know that in certain latitudes where weather has not been that impactful, the new collection has been appreciated very well. And for sure, we have a mix of heavy weight, which can be improved.

Speaker #3: Compared to the weather situation that year after year became warmer. But only in these last couple of days have we seen, in the morning, the temperature going below 20.

Speaker #3: And because we see from the north of Italy that the reaction is already very good, while in the south the temperature still hasn't changed that much.

Speaker #3: We are convinced that, in principle, there are all the elements to think that October and November will be positive. So that's why we are happy, even if we are flattish.

Stefano Beraldo: That is why we are happy even if we are flattish, but being flattish in this condition means doing very well. Then there is also the margin, which is increasing, as Francesco said. So the combination of sales and margin is going to be positive. Francesco?

Speaker #3: But being flattish in this condition means doing very well. And then the results of the margin, which is increasing, as Francesco said. So the combination of sales and margin is going to be positive.

Speaker #3: Francesco?

Speaker #2: Yeah. Thank you, Stefano. On the 5% increase in operating costs, €1.5 million is related to inflation, which of course we had on some costs.

Francesco Leoncini: Yes. Thank you, Stefano. On the 5% increase on the operating cost, 1.5% is related to inflation that of course, we had on some costs, especially on personnel, because we are having in 2026 an additional tranche of the increase of the contratto nazionale. 2.5% is increase in perimeter, so of course, impacting mostly the store costs. The remaining 1% is related to specific elements, the most important one being marketing. We increased our marketing spending versus the H1 of last year, and this is of course, also to the benefit of future growth. Summarizing, 2.5% perimeter, 1.5% inflation and 1%, this marketing increase versus last year.

Speaker #2: Especially on personnel, because in 2026 we will have an additional tranche of the increase from the contratto nazionale. The 2.5% is, of course, impacting mostly the store costs.

Speaker #2: And the remaining 1% is related to specific elements, the most important one being marketing. We increased our marketing spending versus the first semester of last year.

Speaker #2: And this is, of course, also to the benefit of future growth. So, summarizing: 2.5% perimeter, 1.5% inflation, and 1% marketing increase versus last year.

Speaker #1: Okay, very clear. If I may follow up just on another topic—you were mentioning the aging policy that is helping in 2027.

Domenico Ghilotti: Okay, very clear. If I may follow up just on another topic, you were mentioning the hedging policy that is helping 2027. Where are you today in the hedging?

Speaker #1: Where are you today in the aging?

Speaker #3: Nicola? Of course, we are taking some opportunities from the last moment, and we are covering all of spring/summer '27 at an average exchange rate that is a little bit favorable to us compared to spring/summer '26.

Stefano Beraldo: Nicola?

Nicola Perin: Of course, we take some opportunities from the last moments, and we are cover all the spring-summer 2027 at an average exchange rate that is a little bit favorable to us compared to the spring-summer 2026. And other way to the autumn/winter 2027, also in this case, with some additional option compared to the current situation.

Speaker #3: And, another way to the autumn/winter '27, also in this case with some additional options compared to the current situation.

Speaker #1: Okay. Thank you.

Domenico Ghilotti: Okay, thank you.

Speaker #4: The next question is from Carmen Novell, Banca Across.

Operator: The next question is from Carmen Novello, Banca Akros.

Speaker #5: Hi, thank you for taking my question. I hope you can hear me. I have two questions. The first one is on the costs related to the new international openings. If you can quantify a bit their impact on margins.

Carmen Novello: Hi, thank you for taking my question. I hope you can hear me. I have two. The first one is on the costs related to the new international openings, if you can help us quantify a bit the impact on margins. The second one is on the impact of EUR/USD on the full year results, if we can still assume a positive impact at gross profit level of around EUR 10 million to EUR 15 million. Thank you.

Carmen Novel: Hi, thank you for taking my question. I hope you can hear me. I have two. The first one is on the costs related to the new international openings, if you can help us quantify a bit the impact on margins. The second one is on the impact of EUR/USD on the full year results, if we can still assume a positive impact at gross profit level of around EUR 10 million to EUR 15 million. Thank you.

Speaker #5: And the second one is on the impact of the dollar and the full-year results. If we can still assume a positive impact at gross, $10–15 million.

Speaker #5: Thank you.

Speaker #3: I'm not sure I completely caught your question regarding international. Could you elaborate again?

Stefano Beraldo: Not sure to have completely caught your question regarding international. Can you elaborate again?

Speaker #5: If you can help us quantify the impact of the new opening in Dubai on the margin for the next part of the year.

Carmen Novello: If you can help us quantify the impact of the new opening in Dubai on the margin for the next part of the year.

Carmen Novel: If you can help us quantify the impact of the new opening in Dubai on the margin for the next part of the year.

Speaker #3: Very difficult. What we can say is that Dubai opened three weeks ago, and today we are, exactly by chance—by miracle—100% in line with our budget.

Stefano Beraldo: Very difficult. What we can say is that Dubai opened three weeks ago, and today we are exactly, by chance, by miracle, 100% in line with our budget. But only three weeks. We have no clue of what is going to happen next month and next year because of the political situation. We are learning every day what we miss, what we can improve. The first impression is that if things will continue like this, we have a positive margin in Dubai starting year one, which to me is like miracle. But if it would be negative, could be negative by maybe EUR 500,000, EUR 1 million. That is the worst case scenario. More likely will be positive if things will continue like they are doing now.

Speaker #3: But only three weeks. We have no clue what's going to happen next month or next year because of the political situation. We are learning every day what we miss and what we can improve.

Speaker #3: The first impression is that if things continue like this, we have a positive margin in Dubai starting year one, which to me is like a miracle.

Speaker #3: But if it would be negative, it could be negative by maybe €500,000 or €1 million. That's the worst, worst, worst case scenario. More likely, it will be positive if things continue like they are doing now.

Speaker #3: We have a positive margin in Dubai, and maybe we have $10 to $15 million incremental turnover because we are talking about a store that is expected to generate more than $10 million in turnover.

Stefano Beraldo: We have a positive margin in Dubai, and maybe we have a EUR 10 to EUR 15 million incremental turnover because we are talking about a store that is subject to generate more than EUR 10 million turnover in a full year. CapEx has been spent during this fiscal year, so in 2022, Dubai should generate positive results. In term of impact of dollar, we have about EUR 8 million, which are visible already in the H1. Next year, we have a slight advantage compared to this year, so no major impact basically. Let's say in a different way. Year 2026 has been benefited from the dollar depreciation.

Speaker #3: In a full year, Capex has been spent during this fiscal year. So in 2022, Dubai should generate positive results. In terms of impact of dollar, we have about $8 million, about $8 million which are visible, okay, already in the first half.

Speaker #3: Next year, we have a slight advantage compared to this year, so no major impact, basically. While year 2020—let's say it in a different way.

Speaker #3: Year 2026 has benefited from the dollar depreciation. The hedging policies that we put in place, which—as Nicola explained—are, as of today, covering fully the first half of 2027 and 50% of the second half of 2027, are telling us that the exchange rate for 2027 will be slightly favorable, say equal. So, the gross margin improvement generated by the dollar will remain as it is also during next year.

Stefano Beraldo: The hedging policies that we put in place, which, as Nicola explained, are, as of today, covering fully the H1 of 2027 and 50% of the H2 of 2027, are telling us that the exchange rate for 2027 will be slightly favorable, say equal, so the gross margin improvement generated by the dollar will remain as it is also during next year.

Carmen Novello: Okay, thank you.

Carmen Novel: Okay, thank you.

Speaker #3: Thank you.

Stefano Beraldo: Thank you.

Speaker #4: As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Luca Bacoccoli, Intesa Sanpaolo.

Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Luca Baccolini of Intesa Sanpaolo.

Luca Baccolini: Hi. Good morning, everyone. Can you hear me?

Luca Bacoccoli: Hi. Good morning, everyone. Can you hear me?

Speaker #1: Hi, good morning everyone. Can you hear me? Okay, good. So, I have some questions from my side as well. The first one is on Stephanel.

Stefano Beraldo: Yes.

Luca Baccolini: Okay, good. Some question from my side as well. The first one is on Stefanel. A clarification on the performance in the H1. You mentioned on the presentation that it was up 11% in the H1, while in the Q1, if I am not wrong, was plus approximately 20%. It means almost a stable implied Q2 growth. I was wondering, what is driving this high volatility from one quarter to the next, and what should we expect going forward this year? Then I have a question on Dubai. I was making some very easy calculation, and it seems that the returns for each square meters, given the 2,500 square meter average surface vis-a-vis the surface in Italy.

Luca Bacoccoli: Okay, good. Some question from my side as well. The first one is on Stefanel. A clarification on the performance in the H1. You mentioned on the presentation that it was up 11% in the H1, while in the Q1, if I am not wrong, was plus approximately 20%. It means almost a stable implied Q2 growth. I was wondering, what is driving this high volatility from one quarter to the next, and what should we expect going forward this year? Then I have a question on Dubai. I was making some very easy calculation, and it seems that the returns for each square meters, given the 2,500 square meter average surface vis-a-vis the surface in Italy.

Speaker #1: A clarification on the performance in the first semester. So you mentioned in the presentation that it was up 11% in the first semester, while in the first quarter, if I'm not wrong, it was plus approximately 20%.

Speaker #1: So it means almost a stable implies quarter growth. And I was wondering, what is driving this high volatility from one quarter to the next?

Speaker #1: And what should we expect going forward this year? Then I have a question on Dubai. I was making some very easy calculations, and it seems that the returns for each square meter, given the 2,500 square meter average surface, vis-à-vis the surface in Italy...

Speaker #1: So, I was wondering if you can confirm that, and if there's, let's say, a premium price for the same garment that you sell there versus the one sold in Italy.

Luca Baccolini: I was wondering if you can confirm that and if there is, let us say, a premium price from the same garment that you sell there versus the one sold in Italy. Then the other question is on the free cash flow generation, which was very good, a significant improvement in the H1. Are there any reasons why those improvements might be reversed in the next two quarters? Finally, on Altavia, how big is the brand right now, and what was the H1 growth year? Thank you.

Luca Bacoccoli: I was wondering if you can confirm that and if there is, let us say, a premium price from the same garment that you sell there versus the one sold in Italy. Then the other question is on the free cash flow generation, which was very good, a significant improvement in the H1. Are there any reasons why those improvements might be reversed in the next two quarters? Finally, on Altavia, how big is the brand right now, and what was the H1 growth year? Thank you.

Speaker #1: And then the other question is on the free cash flow generation, which was very, very good. Significant improvement in the first half, and are there any reasons why those improvements might be reversed in the next two quarters?

Speaker #1: And finally, on Altavia, how big is the brand right now, and what was the first semester growth year? Thank you.

Speaker #3: On Stephanel, the answer is very easy. We sold so much during the first half, and we didn't buy that much because Stephanel—I consider Stephanel still a restarting, a relaunch, a turnaround story.

Stefano Beraldo: On Stefanel, the answer is very easy. We sold so much during the H1, and we didn't buy that much because of Stefanel. I consider Stefanel still a restarting, a relaunch, a turnaround story, so we have been very prudent in the sourcing. The sales of the first four months has been so high that we remained without stock for summer. There is not a volatility. There is only maybe an excess of prudence in the intake, which penalized a bit the second portion of the H1, but no issue, and the collection for autumn/winter is beautiful. Even if in this segment, the market is very challenged and difficult, we have a good feeling on Stefanel. On Dubai, yes, I don't really understand your calculation, but basically, I confirm that we have 2,500 square meter.

Speaker #3: So, we have been very prudent in the sourcing. The sales in the first four months have been so high that we remained without stock for summer.

Speaker #3: So, there is not a volatility. There is only maybe an excess of prudence in the intake, which penalized a bit the second portion of the first half.

Speaker #3: But no major issue, and the collection for autumn/winter is beautiful. So even if in this segment the market is very challenged and difficult, we have a good feeling on Stephanel.

Speaker #3: On Dubai, yes. I don't really understand your calculation, but basically I confirm that we have 2,500 square meters. When I said that the rationale for our expectation on sales is between €10 million and €50 million, it means that we have a forecast of €5,000 per square meter—€4,500, €5,500, €6,000 per square meter.

Stefano Beraldo: When I told that the rationale for our expectation on sale is between EUR 10 and EUR 15 million, it means that we have a forecast of EUR 5,000 per square meter, 4.5.5, EUR 6,000 per square meter, achievable, much higher than Italy, obviously. Driven by the fact that the shopping mall, in normal condition, we know many brands which are operating inside. We have a figure of our competitors or friends, which are confirming us that the amount of EUR 15 million, for instance, is fully achievable. Maybe not in the first year. The markup is important. We are selling, in these three weeks, in line with our budget, with a markup of about 40% compared to Italy. With this figure, we will be profitable. The rents are very high, but the cost of labor is pretty low.

Speaker #3: Achievable; much higher than Italy, obviously. Driven by the fact that, in normal conditions, we know many brands that are operating inside the shopping mall, so we have a figure from our competitors or friends which are confirming to us that the amount of €15 million, for instance, is fully achievable.

Speaker #3: Maybe not in the first year. The markup is important. So, we are selling in these three weeks in line with our budget, with a markup of about 40% compared to Italy.

Speaker #3: So, with this figure, we will be profitable. The rents are very high, but the cost of labor is pretty low. So the combination of very high rent, low cost of labor, and higher margin because of the markup is generating the expectation of a profitable business, provided that the sales come, obviously.

Stefano Beraldo: The combination of a very high rent, low cost of labor, and higher margin because of the markup, is generating the expectation of a profitable business, provided that the sales comes, obviously. But as of now, as I said, the sales are arriving. In term of cash flow, no reverse effect expected. Because there is no working capital movement generated by payment terms or different policies in sourcing or intake. Basically, no reason why not to continue to believe that we can increase for the full year the cash generation compared to last year. If last year was about 90, we believe that this year it might be 100, maybe. That's what we feel.

Speaker #3: But as of now, as I said, the sales are arriving. In terms of cash flow, no reverse effect is expected. But because there is no working capital movement generated by payment terms or different policies in sourcing or intake, so basically no reason why not to continue to believe that we can increase, for the full year, the cash generation compared to last year. If last year was about 90, we feel, we believe, that this year it might be 100, maybe.

Speaker #3: So that's what we feel.

Speaker #4: The next question is from Domenico Ghilotti, Equita.

Operator: The next question is from Domenico Ghilotti, Equita.

Speaker #1: Yes, I have two additional questions. One is on the capital allocation. Given, let's say, €100 million free cash flow generation, what is your priority?

Domenico Ghilotti: Yes, I have two additional questions. One is on the capital allocation. Given the, let's say, EUR 100 free cash flow generation, what is your priority? Could we expect an increase in the dividend? Could we expect a new M&A over the next 12 months, or deleveraging or buybacks? My second question is on store opening contributions. For the first time, probably over the last few years, you are mentioning a quite significant, or reporting quite significant contribution from store openings. The 3%, if I understood properly, was organic, like-for-like and another, say, 2.5% to 3% in new stores. Should we expect this to continue? Because we have several opportunities, or should we expect a contribution from store openings similar to this level in 2027?

Speaker #1: Could we expect an increase in the dividend? Could we expect a new M&A over the next 12 months, or further leveraging or buybacks? And my second question is on store opening contributions for the first time, probably over the last few years. You are mentioning, or reporting, quite a significant contribution from store openings.

Speaker #1: The 3%, if I understood properly, was organic life or like, and another say 2.5–3% from new stores. So should we expect this to continue because you have several opportunities, or should we expect a contribution from store openings similar to this level in 2027?

Speaker #3: Okay. Okay. So contribution. Capital allocation. Well while I was saying before to you that to you guys that we were expecting that the 90 million generated last year we became 100 million this year the team was looking at me saying maybe we will do better.

Stefano Beraldo: Okay. So contribution. Capital allocation. Well, while I was saying before to you guys that we were expecting that the EUR 90 million generated last year will become EUR 100 million this year, the team was looking at me saying, "No, maybe we will do better." So maybe we will do something more than EUR 100. I take the opportunity of your question maybe to correct. But to me, EUR 100 or EUR 106 or EUR 105 is the same amount. Maybe for you it's different, for me, it's the same amount. This increase of cash will be used, or this cash flow anyway, will be used surely for dividends. We will continue our dividend policy. In term of buyback, it will depend from the share price, obviously. If the share will move where it should go, in our opinion, our attitude to buy back share will become lower.

Speaker #3: So maybe we will do something more than 100. So I take the opportunity of your question to maybe to correct. But to me, 100 or 106 or 105 is not—it is the same amount. Maybe for you, it's different, for me it's the same amount.

Speaker #3: This increase in cash will be used, or this cash flow anyway will be used, surely for dividends. We will continue our dividend policy. In terms of buyback, it will depend on the share price, obviously.

Speaker #3: If the share will move where it should go, in our opinion, our attitude to buy back shares will become lower. Once the share price, like last week, would decrease unexpectedly and without any reason generated by results, we will consider that our third party—because you have to remember that we always have a third party which is working.

Stefano Beraldo: Once the share price, like last week, would decrease unexpectedly and without any reason generated by results, we will consider that our third party, because you have to remember that we always have a third party which is working. We are not taking daily decisions, but the attitude, obviously, that we pre-agreed with our third party is that because they have to try to operate in a constructive way, they will buy more. This is what happened. The attitude to buy back share will continue, and the attitude to be generous in dividend distribution will continue. That's why. Because we think that the present capital allocation is appropriate. We don't need a big amount of money for big acquisition. We don't have in our radar big acquisition. Every day, we look at things like brand.

Speaker #3: We are not taking daily decisions, but the attitude—obviously, that we pre-agreed with our third party—is that, because they have to try to operate in a constructive way, they will buy more.

Speaker #3: And this is what happened. So the attitude to buy back shares will continue, and the attitude to be generous in dividend distribution will continue.

Speaker #3: That's why, because we think that the present capital allocation is appropriate, we don't need a big amount of money for a big acquisition. We don't have any other big acquisition.

Speaker #3: Every day, we look at things like brand. I declared last week, two days ago, at Fashion Week, answering a question from a journalist regarding the accessory.

Stefano Beraldo: I declared last week, 2 days ago to Fashion Week, answering to a question of a journalist regarding the accessory, I said, "Yes, if I should find a smart brand in the accessory, I would be interested in buying this brand." But at which price? Not EUR 50 million, not EUR 30 million. Whatever acquisition we would make in the next coming months or semester would not impact our balance sheet and our cash generation. Also in this way, I answer to you that we don't have major acquisition in our radar.

Speaker #3: I said yes, if we should find, if I should find a smart brand in the accessory, I would be interested in buying this brand.

Speaker #3: But at which price? Not €50 million. Not €30 million. So whatever acquisition we would make in the next coming months or semester would not impact our balance sheet and our cash generation.

Speaker #3: So, also in this way, I answered to you that we don't have major acquisitions in our, other than you asked about the contribution of the new opening.

Domenico Ghilotti: Yeah.

Stefano Beraldo: Then you asked about the contribution of the new opening. To be honest, we did not mention sometime because we did not have the time to elaborate or because we did not receive question, but we are growing every year in the last five years as a combination of like-for-like and new openings. So before I mention the new openings of Upim, for instance, because Upim is growing more than OVS in terms of new openings, simply because the market share of Upim is still lower, and Upim is targeting more than OVS, the lower social class, let's say. So the ones that are less demanding in terms of fashion and more demanding in terms of affordability. But we are continuing to open OVS stores. We are continuing to open franchisee store. OVS will open more also with Shaka.

Speaker #3: To be honest, we didn't mention some things because we didn't have the time to elaborate or because we didn't receive questions. But we are growing every year, in the last five years, as a combination of like-for-like and new openings.

Speaker #3: So, before, I mentioned the new openings of Upin, for instance, because Upin is growing more than OVS in terms of new openings, simply because the market share of Upin is still lower, and Upin is targeting more than OVS the lower social class, let's say.

Speaker #3: So, the ones that are less demanding in terms of fashion and more demanding in terms of affordability. But we continue to open OVS stores, we continue to open franchise stores. OVS will open more, and also with Shaka, we have the plan to open plenty of Shaka stores in the next coming quarters. This also will depend on the attitude of the Korean brands to improve margin conditions that I'm asking them, because when I was in Milan, I met all the CEOs of the Korean beauty brands and I said, "Listen, we are ready to open 200 stores."

Stefano Beraldo: We have the plan to open plenty of Shaka stores in the next coming quarters. This also will depend on the attitude of the Korean brand to improve margin condition that I am asking them, because when I was in Milan, I met all the CEO of the Korean beauty, and I said, "Listen, we are ready to open 200 stores." This I told to them, not to you. We are ready to open 200 stores in Italy because the 10 stores that we opened as of now, I think 10, or yesterday we opened the 11th store, I think. We have very high sales density, but in order to be very profitable, because we want to be very profitable, not modestly profitable, we need another 300 basis points of margin increase. So let's see what happen.

Speaker #3: This I told to them, not to you. We are open, we are ready to open 200 stores in Italy, because the 10 stores that we opened—as of now, I think 10, or yesterday we opened the 11th store—I think we have very high sales density. But in order to be very profitable, because we want to be very profitable, not modestly profitable, we need another three or four basis points of margin increase.

Speaker #3: 300 basis points—sorry, not 3 points. So, let's see what happens. But there is room for OVS to open plenty of Shaka stores, for OVS to still open a bunch of full-format stores in Italy, and also to move from smaller to bigger stores.

Stefano Beraldo: But there is room for OVS to open plenty of Shaka stores, for OVS to still open a bunch of full format in Italy and also to move from smaller to bigger store, which is something that now we can do because we have not enough space for all creativity and the brand that we have in the women segment, as I said in the beginning. So the story of opening space is still valid. We know that Zara Inditex group is growing in Italy, and they are not growing only with the like-for-like. They are also growing by opening some stores. So it is a mix of factor, and we will continue to activating both, hopefully the like-for-like because of what I told, but also the new openings.

Speaker #3: Which is something that now we can do because we do not have enough space for all the creativity and the brand that we have in the women's segment, as I said in the beginning.

Speaker #3: So, the story of opening space is still valid. We know that Zara Inditex Group is growing in Italy, and they are not growing only with the like-for-like.

Speaker #3: They are also growing by opening some stores. So it's a mix of factors and we will continue to activate both, hopefully the Like for Like, because of what I told, but also the new openings.

Speaker #1: Okay. Thank you.

Domenico Ghilotti: Okay. Thank you.

Speaker #2: Once again, if you wish to register for a question, please press star and one on your telephone.

Operator: Once again, if you wish to register for a question, please press star and one on your telephone.

Speaker #3: Okay, so thank you for your question, and I hope to talk to you in three months from now for the next conference. Thank you very much.

Stefano Beraldo: Okay. Thank you for your question, and hope to talk to you in three months from now for the next conference. Thank you very much. Thank you. Have a nice day.

Speaker #3: Thank you. Have a nice day.

Speaker #2: Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Speaker #4: I feel like somebody's watching me. And I have no property oh I always feel like somebody's watching me. Tell me is it just a dream?

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