Lanvin Group Holdings Limited Ordinary Shares

Thank you for joining us, and welcome to the Lanvin Group's 2023 First Half Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. Now, please take a moment to review the disclaimers. During this presentation, the company will be making certain forward-looking statements included but not limited to future performance and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties, and other factors, and they are not guarantees of performance. For today's presentation, I would like to introduce Joanne Cheng, the Chairman and CEO of Landvin Group, David Chan, Executive President and Interim CFO of Landvin Group, Siddhartha Shukla, Deputy General Manager of the Landvin brand, and Sylvia Azali, CEO of Wolford. With that, I would like to turn the call over to Joanne Cheng to start the presentation.

Thank you all for joining us today. I'm Joanne Cheng, the Chairman and CEO of Levant Group. I'd like to start by recognizing the entire Levant Group and the brand team for their effort in the first half of 2023. Among our achievements in the first half, We transitioned our creative direction at Lavon and set our future path. Launched our creative lab program to bring new insights to creative direction for Lavon. We welcomed the now Takikoshi into our family as our creative director for Worldfall and then reacquired the Lavon's trademark in Japan. Regarding our financial performance for the first half, we had a solid first half, continuing our top-line growth and the market improvement across our portfolio. Our industry faced macro economy challenges in the first half, but to our credit, we were nimble and decisive in adapting our strategy, such as accelerating the buyback of Lavon Japan trademarks and the development of Lavon Labs, while pushing out certain marketing initiatives to launch during better market conditions. Furthermore, we saw improving pace in growth in all other regions starting in April. We continue to make progress on our path to profitability. Our improvement in gross profit and contribution profit are evidence of our commitment to profitable growth. We have done the groundwork for our brand to ramp up their growth and are excited about our prospects for the remainder of 2023. we have an exciting second half planned with the first Lavon Lab collaboration launched with its first-ever collaborative designer, the Grammy Award-winning artist, Future. The opening of Lavon's Madison Avenue store in New York City, World War's Next Step with Mao Takikashi as a creative director, and its collaboration with No. 21, as well as St. John's partnership with celebrity stylist Cara Welsh. With that said, I'm pleased to report that we continue to grow our group revenue in the first half of 2023, achieving €215 million compared to €202 million in the first half of 2022, representing a growth of 6.4%. Our gross profit for the year increased to €125 million by €130 million, with our margin improving to 58.5%, from 55.9%. Our financials show period-over-period stabilization of our core operating cost line items, including cost of sales, marketing and selling expenses, and GMA expenses. The progress we have made in optimizing our cost structure has created a significant operating leverage to drive profitability as we accelerate our top-line growth in the second half. With that, I'd like to turn it over to our executive president and the interim CFO, David Chan, to go through some of the details.

Thank you all for joining us today. I'm David Chan, executive president and interim CFO of Lamang Group. Like Joanne, I'd like to take a moment to recognize the entire Lamang Group family for their hard work in the first half of 2023. I see the progress we have made, and I'm excited for our future. First, I'd like to direct you to pages 5 to 7. You can find a deck that we have just uploaded to our IR website. Our sales continue to improve across the portfolio, period over period. We saw particularly strong growth in Greater China at 13.9%, with Serge Rossi, Warford, and Xinjiang leading the way. EMEA grew 5.3% from strong domestic demand, and North America remained resilient, managing through an unsteady economy by growing 2.6%. Our DTC channel grew at 5.1%, while our wholesale channel grew 2.2%. Additionally, we saw increases in other revenue, mainly stemming from increases in our royalty revenue, from the acquisition of the Long Bon Japan trademarks, and from clearance income. Wolfer and St. John's. Two of our three largest brands by revenue continued their solid growth with revenue up 8.4% and 11.3% respectively. And Sertorossi showed very strong results with growth in all regions and channels at an overall growth rate of 22.4%. Caruso continued to take advantage of the acquired luxury trend and its production capability by growing its B2B Mazars business in Europe by 42.9% and 33.6% overall. Moving on to Lanvin, as Joanne mentioned, Lanvin began the year by transitioning his creative direction and taking steps to plan new creative initiatives to be launched in the second half, resulting in comparatively lower period-over-period revenue of €64 million in the first half of 2022 versus €57 million in the same period in 2023, a decrease of 10.8%. Following the four-year tenure of Bruno Sinelli, Long Bon decided to make a strategic change in its creative direction and also launched Long Bon Lab, both of which will impact revenue in the second half, but did not benefit the results in the first half. With the trends in Greater China and U.S. improving, we're expecting a strong second half performance as our strategic plans begin to accelerate Long Bon's revenue growth. As I mentioned in our full year 2022 earnings webcast, Greater China and North America are significant areas of potential growth, and as the numbers show, we continue to keep them as the focus areas for our growth. Next, I'd like to point you to pages 8 to 10 and to discuss some of our first half brand highlights. Focusing on Lanvin first, our flagship brand had some key achievements. Lanvin's fall-winter 2023 fashion show was well-received with strong acclaim and recapturing elegance in a wearable form. Second, We have successfully reacquired Lombon's trademark in Japan from Itochu Corporation, who has been and remains a valued strategic partner for us. Achieving this milestone allows us to integrate our global IP to further develop a consistent brand image and pursue strategies in a key market for Lombon. Finally, we announced the launching of Lombon Lab with our first guest designer, Future, who not only is a music icon, but also embodies the spirit of Long Bon's new philosophy. I speak for the entire Long Bon group when I say we're extremely excited for Long Bon Labs' first collection, which will launch for winter 2023, with ready-to-wear and accessories for both women and men. We are embarking on an exciting new phase at Long Bon, which Siddhartha Shukla will provide more details in a later part of this webcast. Touching on some of our other highlights, Wolford had a busy first half kicking off a number of initiatives, including collaboration with iconic singer, Grace Jones, and hiring Nile Takakoshi as creative director. Wolford also launched the W Club to provide customers with an integrated digital platform that promotes self-esteem, body awareness, and physical activities, and is curated for with Wolford's and Leisure product offerings. Sergio Rossi and St. John also had a few notable collaborations, including St. John's collaboration with world-renowned producer Shonda Rhimes and a partnership with celebrity stylist Carla Welch. While Sergio Rossi started a project with Japanese artist Marie Katayama called a High Heel Project and officially launched a special capsule with Aria in the first half, leveraging Aria's strong brand in North America. Looking back at achievements during the first half, I realized we have a lot of momentum built up out of brands, which is why I'm excited for the second half. And now, getting back to the financial fundamentals, please turn to page 11 for a review of our profitability and margin performance. Group-level gross profit continued the positive trend, increasing to 125 million euros from 113 million euros with the margin improving to 58.5% versus 55.9%. We continue to benefit from scaling our revenue, and we'll see this impact continue to improve our profitability. Our operating leverage is most evident in our contribution profit increasing from $6 million to $15 million, with the margin improving from 2.9% to 6.9%. I'd like to remind you that our definition of contribution profits, which is a non-IFRS measure, takes gross profit, less selling and marketing expenses. This is a key metric for us to use to gauge the performance of our variable operating efficiency. And we have seen significant progress over the past few periods. Furthermore, taking into account our fixed G&A expenses for the period and calculating the after G&A profit, also known as our adjusted operating profit, we saw a near 600 basis point increase in the margin, showing the potential operating leverage we have created. As a group, our adjusted EBITDA was lower because of the revenue decrease in Long Bomb and the resulting reduced cost risk absorption as well as an increase in investment for selling and marketing. The increase in selling marketing, including investment for the launching of Lombon Lab, for in-person fashion show, as opposed to digital ones in the previous year, for the transition of creative direction and the set of all the brand sales and marketing initiatives planned for the second half. While Lombon's results were lower, all of our other brands continue to improve. With the changes we have made at Lombon, we are setting our path for the future, and I'd like to reiterate, we are on track to break even with Badaa. breaking adjusted EBITDA. With that said, I'd like to turn your attention to page 13, where we show our margin evolution. Our historical trend has remained consistent with steady improvement, period over period, and notably, a strong second half each year. While we are still working on increasing the balanced accessory versus ready-to-wear, we have made significant progress in optimizing our product mix to enhance margins. Furthermore, as you can see on page 14, We have stabilized our OpEx with most of the OpEx reduction behind us. We have been able to grow sales while consistently reducing our OpEx at a percent from 107.4% two years ago to 87.2% for the first half of 2023. Additionally, we have been able to keep the OpEx flat period over period, going from $183 million to $188 million, a $5 million increase while increasing revenue by $13 million. Some of the brand-level achievements I'd like to highlight are, first, full-on bond, we have right-side team across function and empower regional leaders to streamline the organization. And we have also scaled OpEx on a near real-time basis with focus on efficiency and critical review of business expenditures. Wofford is nearing completion of its restructuring measures, including the pooling of distribution activities in Milan and manufacturing efficiency and overhead reduction initiatives. For St. John, the office rationalization is on track to be completed in the second half of 2023, including upgrading the supply chain and rationalizing production. This transition to being a brand company as opposed to a manufacturing business has already brought stability to the brand. Overall, the group is in its strongest position ever to accelerate revenue and capitalize on operating leverage we have built. Our entire team is working towards achieving adjusted EBITDA break-even in 2024, and with our results today, I'm confident we will achieve our goal. Turning to page 15, we take a brief look at our global retail doors. We continue to pursue a rationalization strategy to manage our footprint. We've closed several additional doors in the first half as we strive to optimize our unit economics. We continue to effort to rationalize and upgrade our group's product offerings and store network. Our retail sales per square meter have increased globally, and in particular, the greater China region. Furthermore, St. John and Sardarasi show significant improvement in the first half. Much of the work is behind us, and our store footprint is ready to accelerate growth. Looking at our store growth regionally, We took advantage of opportunities in North America and recently opened our new flagship Long Bon New York City stores on Madison Avenue in July. We remain focused on the potential of Greater China as well as new opportunities in the Middle East where we have plans for our first Long Bon and Walpole locations in the regions to be open in the second half of 2023. We plan to remain diligent and optimistic with our retail network in 2023 to optimize our footprint and maximize ROI. Turning to page 19 and looking ahead at the rest of 2023, we're excited about many initiatives we have invested in, occurring in the second half as discussed. We believe the second half of this year will see improving market condition that we'll be able to capitalize on and drive top-line growth. Additionally, we're progressing on a pipeline of new strategic partnership to enhance production capability as well as expand our retail footprint. On the M&A front, we're having discussions with several interesting parties. Overall, we continue to build our unique ecosystem with best-of-kind partners to enhance our performance and shareholder value. With that, I'd like to discuss our brand-level results and upcoming initiatives. I'd like to start with Lombon on page 18. As I mentioned, Lombon focused on a creative transition while managing through a globally softness first half of market. While revenue was down, I'm pleased to report brand gross profit increased from 30 million to 32 million period over period from higher sell-through rates, resulting in margin increasing from 47% to 56%. Additionally, contribution loss remained relatively flat in the face of lower revenue, dipping slightly by 500,000 euros, from a 4.3 million loss to a 4.8 million loss. Lombon's ability to manage through a creative transition through uncertain economy conditions shows the brand's resilience and is credit to Lombon's management team. The brand will complete its creative transition in the second half and will begin to capitalize on those changes. With that, I'd like to turn it over to Siddhartha Shukla, Lombon's Deputy General Manager, to discuss the exciting upcoming innovation.

Thank you, David. I so appreciate the support from the group, and likewise, share your optimism about the future of Lonvo. I'd like to highlight some of the projects we have coming up in the second half as we continue to see through what has been a very important period of transformation in our operating model and our strategic approach. First and foremost, our focus remains on driving responsible and profitable growth. as evidenced by the first half improvement in margin and gross profit that you've mentioned. Organizationally, we continue our right-sizing and refining of the operating structure in line with the size, scale, and ambition of our business, including controlling expenses, building a team of entrepreneurial talent, and innovating the business model with new strategic approaches to product and communications. In particular, we're closely examining customer profiles and developing relevant next-generation products and marketing, the beginnings of which we will see in the second half. Our new creative model, which was announced last April, is comprised of three verticals. One, the Lanvin men's and women's runway and pre-collections that remain at the heart of the Maison, with a new artistic direction to be announced in the coming months. Two, a dedicated division for the development of leather goods and accessories in order to build a resilient, high-volume, high-margin, long-term business. And three, Lambin Lab, the experimental space for new partnerships, the first being a collection developed with the Grammy Award-winning musical artist Future that is set to debut this winter. Regarding our product strategy, we reset our product merchandising approach one year ago, focusing on a more diversified lifestyle assortment across men's and women's that balances a casual offer with a new sophistication spanning wardrobe and occasion. Additionally, we introduced a robust program of leather accessories and shoes across price points and functions. and we'll be introducing special products and capsules to respond to the various needs of today's consumer, including this fall's launch of the Icon Ballerina and Edition Soir, a seasonless evening wear occasion capsule. We are also implementing customer-centric marketing approaches via more strategic segmented investments and integrated cross-channel activations to encourage acquisition, retention, repeat purchasing, around specific product campaigns and key cultural moments. This will naturally fuel what is a still under-leveraged digital business, which we see powered through the shared U.S. Long Van Group digital service and the more sophisticated full-funnel growth marketing tactics I've just referred to. Geographically, we're seizing the opportunity in Greater China with a considerable advantage versus our competition via internal expertise, local connectivity, and a real agility and speed to market. And in the United States, we're stabilizing what has been remarkable growth over the past two years into a more sustainable business with momentum across all categories and channels. Finally, we are leveraging collaborations, partnerships, and VIP placements to acquire new customers across demographics, growing our global database. Examples of this are obviously Longban Lab and Future, but also our collaboration with the Chinese star Chen Yi, Beyonce, who we've dressed for her Renaissance World Tour, And fundamentally, our ongoing engagement with qualified, influential communities across social media to amplify product launches. And these are all just the beginning.

Great. Thank you very much, Sid. We have, you know, going on to Wolford, we have a high expectation of an alarm on and happy to see the progress we have made so far. So moving to page 19, I'd like to discuss Wolford's results. Revenue increased by 8.4% from €54 million to €59 million in the first half of 2023, with Greater China growing an impressive 46.7% by driving growth in both D2C and wholesale channels. North America, a key objective for Wolper, saw results improved by 10.3%, driven by North American B2C. Wholesale grew by 28.2%, mainly from an opening of new franchise locations, which are included in wholesale revenue, as well as organic growth and price increases. While franchise revenues include in the wholesale channel, it is obscenely B2C as its products are sold from Wolper's brand stores. Gross profit improved on an absolute basis from €38 million to €42 million from higher revenue, with a margin increasing from 70.7% to 71.5%. Contribution profits increased significantly from a loss of €2 million to a profit of €4 million in the first half of 2023. A significant swing in the margin from negative 3.6% to positive 6.7%. The contribution profit marked improvement was due to operating leverage from higher sales, as well as getting beyond the non-recurring expenses that elevated the OpEx in 2022. The progress that Wolfer has made on this path to profitability is a credit to Wolfer's management team and the effort of the initiatives they have undertaken. And with that, I'd like to turn it to our newly promoted CEO of Wolfer, Sylvia Azali. Sylvia, I'd like to congratulate you on your work you've done on Wolfer and let you know that Rubix is excited about the future of Wolfer. To you, Sylvia.

And pardon me, sir. It looks like Sylvia's line has just disconnected. I'll let you know as soon as she dials back in. I do apologize, and I'll put music on while we wait. Thank you. And once again, ladies and gentlemen, thank you for standing by. We'll have Sylvia reconnected here in just one moment. Thank you again for your patience, and we'll be reconnected shortly. And pardon me, everyone. This is the operator. We have reconnected Sylvia's location. Sylvia, please proceed, ma'am.

Thank you. Thank you, Rocco. And sorry, guys, my line dropped. I was so excited for David Ward. Thank you, David, for your kind words and sorry for the trouble. So I'm happy today to report that despite ongoing political and economic challenges, we were able to grow revenue and improve profitability. At Wolfo, we focus on investment in effective marketing activities, on trend design and collaboration, as well as Wolfo's new focus and elevated product proposition of iconic styles and smart seasonal assortments. I'm happy to say that we are in line with our plans. We are taking the right path, and results are alighting that, as previously announced also by David. As you all know, the challenge to our profitability last year was the many legacy issues that affected our results. After only six months, I am really proud to say that the results are now there. With the plus 5 million of a BIT improvement, almost $1 million every month of improvement, which is really massive. Our homework was intense and touched several areas like growth profit improvement, OPEX optimization, and staff cost. Furthermore, structural changes to the company, including the restructuring of supply chain with our new product strategy, is creating more focus on our iconic styles. Lastly, the review of our product offering has positively impacted our gross profit while allowing us to significantly reduce our OPEX and stopping the one-time expenses we incurred last year while starting our restructuring journey. Regarding our team, our staff costs are very much under control and were slightly reduced compared to last year. despite the 10% mandatory increasing from the Austrian government to mitigate inflation effects. In April, we onboarded our new CEO, who is doing a great job in restructuring our supply chain. The effect has not fully impacted our results, but more will come in H2 in terms of company decomplex, additional cost saving while was really needed at Walford as we own our manufacturing. That's the reason we are known for our quality and excellence. With that said, I'm happy to say that the restructuring was an initiative for what we needed to change and was not just a cost-cutting exercise. As such, we continue and even increased our investment on brand and IT to be able to support and speed up even more our transformation. On the brand side, let me mention that the appointment of Naotake Koshi is supporting our two-line strategy, which showroom pre-orders grow in double digits. We were present at the Milan session week for the first time ever with our iconocracy exhibition to launch the Grace Jones campaign, campaign that has been highlighted as the best one of Full Winter 23 by Elle. Also, the W Lab is progressing successfully. In May, we did our new number 21 collaboration, which was perceived extremely well thanks to the creative vision of Alessandro Delacqua, Leisure East Dress. The next collaboration was launched yesterday with Jonathan Sinkai, a young, well-known American designer who is pretty hot also in Europe, by the way. He owns the contemporary floor of U.S. department stores. The growth of the first half is mainly organic, so very healthy. But let me mention two openings of which we are proud of. Epipop in the heart of East Hampton, where visibility is great during American summer, and the reopening of our IFC store in Hong Kong, which used to be one of our best stores in the world. We also continue to promote our athleisure collection that is called the W, and we launched the W Club events around the world, and we were the sponsor of the Yoga Day of the 21st of June, that is the day of the equinox, with an online session in Asia, U.S., and Europe. As I am so excited, let me also unveil you a super hot project that will be soon launched. This project is called the Ultimate Leggings Project. Thanks to the creative vision of NOW and thanks to the innovation ability of our production, we will launch a leggings program that will surprise everyone because fitting and comfort will meet aesthetic and enable leggings to become a must-have garment for every woman, embracing body diversity as beauty and strength for every woman. You have to stay tuned on that because this is going to be really, really big. Lastly, it is also very important to mention our IT investment. We will launch our new web shop at the end of September after 18 months of development with new product image and also new user experience. With it, I am sure our digital space will grow even faster. And following that, in January 2024, we will launch our new omnichannel platform that will fill our last gap to really take the speed. As you can see, 2023 is really the year of Walford as so many things were fixed and so many additional initiatives will be completed in H2 to give us the bright future we deserve. Thank you for the chance to speak now, and I will turn it back to David.

Thank you, Sylvia. Okay, moving to page 20. So, Javasi, with its first full comparable period, saw tremendous revenue growth of 22.4%, improving to €33 million compared to €27 million in the same period. Surjavasi saw strong growth across all regions. Most notably, I'm pleased with the consistent growth in Greater China at 20.9%, as well as the progress with Maine and North America growing at 31.5%. EMEA continued to be a stronghold for Surjavasi with 29.7% growth driven mainly by the local demand. From a channel perspective, So the Rossi has significant growth at its need to see channel of 15% with a particularly strong recovery in greater China at 45.6% growth. Wholesale revenue increased 31.3% from increase in order, particularly for third party production turning to probability. Gross profit increased from €15 million to €17 million, while margin was a bit lower, going from 54.9% to 51.9% due to the increase in wholesale, which I mentioned includes B2B manufacturing. Excluding the manufacturing business, gross profit margin increased in all of the channels in the first half. Contribution profit margin increased significantly over 400 basis points from 13.4% to 17.5% with a profit increasing over 2 million from 3.6 million to 5.8 million from increased operating leverage. Next, I'd like to discuss SingJar. Please turn to page 21. Xinjiang scored another solid performance, with revenue increasing from $42 million to $47 million, a growth of 11.3%. Xinjiang performed well, despite inflationary and other economic challenges in the U.S. Most notably, Xinjiang saw a large boost in Greater China with improved uptake in its reinvented mixed and matched product lines. The region outside North America grew a combined 81.7%. St. John continued to focus on strategic transformation of its D2C channel, which grew by 23.8%. The brand also improved its wholesale network at the same time, resulting in gross profit growing from €26 million to €29 million, with margin improving from 61.4% to 62.2%. This increase was primarily driven by higher D2C revenue and a new wholesale model with one of its clients. which raised the co-sale gross margin higher. Contribution profit margin also grew by 50 basis points, increasing profit by approximately €700,000. St. John continues to embody our strategy of integration and collaboration. St. John's management team has made significant progress on OPEX and working capital efficiency, and it shows their results. As I mentioned earlier, St. John's OpEx initiatives will be completed in the second half, including upgrading the supply chain and rationalizing manufacturing. The transition from the manufacturing-based business model to a brand company has set the foundation for accelerated growth. And so I'm looking forward to the solid second half, especially with the U.S. economy looking better. Turning to page 22, I'd like to discuss Caruso's results. Caruso had a strong half, continuing to leverage its 2022 success in its B2B Amazon business, which grew 33.6% on a like-for-like basis, as well as from its own Caruso brand, which also shows strong growth. Total revenue was €20 million compared to €15 million in the same prior period. representing a growth of 33.6%. Caruso continued to capitalize on a quiet luxury trend with its B2B Mazam manufacturing clients in Europe, a stronghold growing by 42.9%. The brand is expecting continued growth thanks to a strong response to its new Caruso collection as well as positive business management with Mazams. Gross profit grew from $4 million to $5 million, and contribution profit follows suit, growing from $3 to $4 million. Gross profit margin increased from 25% to 26.3%, and contribution profit margin increased from 20.5% to 22%. At this point, I would like to turn it back to Joanne to provide some final remarks.

Thank you, David. To close our results call, I would like to highlight some key takeaways. First of all, we faced some challenges in the first half of 2023, but we remained resilient. will continue to drive growth and improve margins. Secondly, the creative transition we undertook at Lavon in the first half impacted the results. However, it also set us up for a strong future. Thirdly, the positive reception of our creative language at Lavon and Walpole give us confidence that we are on the right track. For the rest of the brands, Walvo, Federossi, and John Caruso all made a significant progress and grew a combined 14.7%. Walvo, in particular, is an example of the specific direction that we are taking on our path to profitability. And the progress they have made is validation of our direction. Much of the network is complete to begin accelerating pipeline growth and capitalize on our operating leverage. And we have made additional investments in the first half to support that growth. We are seeing stronger trend in the Great China region and the plan to capitalize on the momentum. We also remain optimistic in the North American market for the remainder of the year. Finally, I would like to conclude by saying that we are excited for the remainder of the year. We have a lot of things planned to not only increase our brand equity, but also drive our top-line profitability. On behalf of the entire management team, thank you for listening to this presentation.

Thank you. If you would like to ask a question, please press star then 1 on your touch-down phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. And today's first question comes from Tracy Kogan with Citigroup. Please go ahead.

Hey, thank you, everyone. I think you mentioned that you see transit land van improving in the second half and was wondering what early reads you might have on that. And then I had a follow-up. Thank you.

Sure. Yeah, maybe. Thanks, Tracy. It's good to hear from you. I think we are definitely planning a lot for the second half. As I mentioned, first half being a very transitional first half for Longbarn's creative direction. I would probably invite Sid to give a little bit more comment on what we are planning or some of the trends that we see, at least for the first few months into the second half. You know, for example, the leather good products that we're planning on, the creative direction that we are, we will be making a decision on that for a few months. And it's also the future collaboration, right, which is a big kind of testimony for the second half, which will be launched in kind of a later part of 2023. Sid, do you want to chime in a little bit on this? Sid, are you here?

Pardon me, Sid, I believe your line may be muted. Mr. Shukla, is your line muted, sir? I'm sorry, Mr. Tan, it looks like we're not getting any audio from Mr. Shukla's line.

Okay, no problem. Maybe we can, I think, Tracy, you had a follow-up, right?

Yeah, sure. I guess on the CapEx line, it looked like it had increased significantly in the first half versus last year. And I was just wondering if you could go over some of the big investments you've been making and kind of what the timeline is on those when you might expect to see the benefits from those investments. Thanks.

Yeah, our CapEx strategy has still relatively consistent with in 2022. As we mentioned, we can see over 80% of the CapEx spend is really talking, is really make into the store extension. I believe we have opened across five brands. Obviously, we have a lot of closure to keep rationalizing our stores, but I think we have over, I think we'll be over 15, 20 stores in the first half. Those are majority of our CapEx span. As you can allude from Sylvia's kind of comments as well, IT extension is also one of our key kind of areas. you know, kind of a contribution factor. You know, we are making quite a bit of investment, whether you're building a new site or some of the back-end IT infrastructure. So those are two areas that we're going to continue to make investment for the future growth on the CapEx. Hope it helps.

Thank you. You said you opened 15 to 20 companies. stores, growth, I guess, so you maybe closed a bunch more. What is the cost of the build-out for your stores these days, and has that been coming down as you've been refining the model?

Yeah, sorry, let me correct. I think we opened total about 12 stores, you know, total in the first half, and then we closed about 21 stores today. So we have net loss about nine stores, right? And then the cost is very dependent. I think Long Bon, generally speaking, is a little bit more expensive. We haven't disclosed, but naturally speaking, will be more expensive. The Wolfer store historically has been a little bit smaller. But we are changing the Wolfer. If you look at the Hong Kong IFC stores, that we have a new model that Wolfer want to get into with leisure products that were coming on. So we're rebranding, kind of restructuring the Wolfer a little bit. So in terms of square footage, we've been a little bit bigger than a typical Wolfer, kind of historical, whole street stores. The Lanvin store would be very on par with a typical luxury house, but I think we are focusing on 100 to 150 square meters compared to a much bigger space for other competitors.

Got it. Thanks very much. No problem. Thank you. And, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star then 1 at this time. Today's next question comes from Liwei Hu with CICC. Please go ahead.

Thank you, everyone, and congrats on the improvement of results. And Sylvia, I can confirm that your woofer store in IFC Hong Kong is very successful. Our office is right about that. I've got two questions. The first one is on the future artistic director, Lan Vong. I understand he or she will be working with the Lanvin Lab. Is it more of a collaboration model, or is it more like the Gucci model where the artistic director has a say on the fashion direction, but the lab will also have more say on the merchandising? I'm just trying to understand the working relationship with the two at Lanvin in the future. That's my first question.

Yeah. Sure. I can answer, and I'm not sure whether Sid can hear us now. Yes.

Thank you.

All right. Okay. Anyway, so in our previous presentation, we say that we still have, we are now in the process of searching our credit addresses. So overall speaking, we'll have our credit, you know, overall in charge for future. I mean, the so-called future collaboration with that family-winning rapper singer is our guest director for Lavon Lab. That's in parallel with the Ready to Wear and Accessory Line, which is a special program to really diversify our grade 8, like a roadmap to attract young people and to talk to young generations. So, you know, we have three verticals, Levant Men's, Women's, as a runway and a pre-collection. This is still our main collection. And we also will have a delegated division for leather products and accessories. And the Levant Lab, which the first guest director, like future as a representative, he actually will be the experimental space for our, you know, new partnership. When we launch and push out these captures, we talk to the young customers. So maybe, you know, Sid, if you have anything you want to add to say to Charmaine.

Sure. Can you hear me? Yes, very clearly. Great. Thank you for the question. And, yeah, I would simply echo what Joanne said. You know, we – we have clearly identified these three verticals as a way to reorganize the studio and the creative approach, but also because we recognize that Lanvin is not a monoproduct brand. It's a multi-product, multi-category brand, as well as it having relevance across demographics. And so I think Lanvin Lab, as it's an experimental space, allows us to give freedom to different voices, but it also fundamentally acknowledges Long Van's place as a cultural brand within the luxury landscape.

Got it. That is very helpful. Thank you. And my second question is on Sergio Rossi, you know, one of our best-performing brands. You know, there's some rumors that Gianvito Rossi is up for sale and some luxury conglomerates might be interested in acquiring genvito rossi trying i'm trying to get a you know understanding of our current relationship with genvito rossi and are we worried about you know the cannibalization once the brand has a new owner thank you yeah i think that is a

not a rumor, it's a confirmed news that Richmond Group has acquired shares of Jamito Rossi. You know, nothing has changed in current business environment that the Rossi do carry its heritage. You know, we talked to like an elegant young woman who is in love with the high-heeled shoes. And also we want to really talking to become trendy and talking to young generation by push out our comfort shoes like SR1 or sneakers. But again, elegance is the core. So in the second half year, we're preparing for launching our mermaid half-suit, which is back to, you know, kind of the core. So there's not much changes, and there's no so-called collaboration between these two plans apparently now.

Got it. Yeah, because apparently part of the success of Gianvito received heritage from his father, and I was just trying to see if any non-compete or any safeguard we have in place to protect the very good momentum of Sergio Rossi. Anything you could share or any strategy you might have would be very helpful.

I think it's difficult for us to comment on other brands. I think we have We believe we have 6,000 pairs of archives in the heart of the factory, which is in Sotirossi in Milan. So we remain to be pretty focused on really modernizing The 6000 archive really does a lot of opportunity there. Our store base in Asia and North America is still very much wide open. We have, you can see from the number, we have very good success in the greater China for the first half. For North America, we just entered, very, very touching really the surface of the growth. We started with the online Shopify kind of platform we built last year. We see good growth on the digital front. However, the second half or this year, we're planning a much bigger presence in North America for Serge Rossi. Yeah, we still remain very focused on trying to bring out DNA and modernizing DNA and capitalizing in these kind of free, low-hanging fruit, I would say, in these two regions, right? Got it. Thank you very much, David.

Thank you.

Thank you. And, ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to the management team for any final remarks.

Okay. All right. So if there's no other questions, I want to thank everyone online that spent time with us. But if any further questions, feel free to reach out to LeVon Group, our IR team and PR team. So thanks for your time again. Have a good day.

Thank you very much, Guy.

Thank you, everyone. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.