Adidas Ag Ord

Ladies and gentlemen, welcome to the Adidas Aggie Q2 2024 conference call and live webcast. I'm Alice, the Carlos Call Operator. I would like to remind you that all participants have been listed on the mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sebastian, Head of Investor Relations. Please go ahead.

Thanks very much, Alice. Hello, everyone, from Sunnyhurst in Auerbach, and welcome to our Q2 2020. Our presenters today are our CEO, Björn Golden, and our CFO, Harm Olmeier. As always, I would like to remind you that during the Q&A session, you limit your initial questions to two to allow as many people as possible to ask their questions. Thanks very much in advance for sticking to that rule. I hope that you are as excited as we are about the Olympics. So before we're going to dive into the quarter, and I hope you got that metaphor here, let's have a look at the latest chapter of our brand campaign, You Got This.

Hold up. It's only doubt. It's only talk. It's only another maze. It's only another day. It's only the spotlight. It's only noise. It's only pressure.

Hello also from my side. I hope you are enjoying the Olympics as much as we do. I think so far it's been great events and following up the Euro and the Copa we are in the middle of a beautiful sports year. I would also like to remind you about one thing and that is that we are still celebrating our 75th birthday. And as you can see from the slide, it's been a great event for us to celebrate. Here you see from Herzog, we had more than 20,000 people celebrating with us. We had what you call the grandchild of Adi Dassler with us. We had Herbert Heine with us. We had Jackie Johnny Kersey with us. And a lot of other celebrities that celebrated the fantastic history and the company we are. And last week we also celebrated in Portland with 4,000 people. So there is a good spirit in the Adidas family and very, very unique. We have talked to you many, many times over the last 12 months about the hope that 2024 would be a great sports year, and I think we all agree it has been so far. It's also, therefore, great to report that our business is improving. You probably know all the numbers, but I'll take you to them very quickly before Harm later goes through them in detail. Again, our currency neutral sales were up 11%, and Adidas' underlying business was up even 16%. And as you know, that's way above what we thought it would be. And it's a combination, of course, of a great sell-through and also that retail is, again, showing great interest for our brand and product. As important, the gross margin. As you can see here, the underlying margin is up around 150 basis points to 50.8%. When you compare it to last year, you see it's down 10 basis points, but that is, of course, that we had a huge easy sales of $400 million in Q2 last year, all through e-com, and this quarter we only have $200 million. That's the difference. So, again, a very healthy gross margin on the underlying Adidas business. That gave us an EBIT of $346 million, which is almost twice what we had last year. And again, a very, very positive development that then altogether made us increase our outlook guidance for the rest of the year. And we now talk about the high single-digit growth for the full year and an EBIT of around 1 billion. Again, back to the sports, we said all the time that we looked forward to the Euro, the Copa, and of course what's going on in Paris, both from Olympics and the Paralympics. I think you agree with me that the Euro and Copa were two great events. I think here in Germany it was a fantastic Euro. A, from the environment in the stadium, the atmosphere, but also the way the fans and the whole country showed up. And for us, you know, Spain winning the tournament even greater. And as you probably have read in all media, we also had a much higher sales of jerseys. Not only what we delivered into the trade, but also the sell-out through the trade was way above expectations. And as you can see, we approached 3 million jerseys. So a great, great also commercial event. I would also like to say that our own people, the way they activated the euro, the way we had customers at the different games, And the way we celebrated both the brand and football was very, very good. So a big thank you to our teams. I think I will also, in the discussion of federations, like to add this slide. Spain, you know, is the federation that wins everything. Remember, they won the World Cup for women last year. The men's team have won both the Nations League and the Euro in 24. And a weekend ago, the under-19 also won the Euro. In addition to that, they won the under-17 both for girls and boys. And I think the women's team also won the Nations League. So Spain is basically winning everything. And as you probably know, we have a long-term contract with them and are very, very happy for that. When you then go to the Copa, same thing, great event. We had eight federations at the start. Both teams in the final, Argentina and Colombia, was playing Adidas. And again, Argentina won. And as you will hear later, we used this also to extend the contract with Argentina through 2038. So I think we have the best federation in Europe. And we probably have the best federation in the world under our contract and will be in three stripes for a long, long time. Here also the same thing again. The commerciality was great, and we sold almost 2 million jerseys around, what should I say, the teams and events. Now some of you are then calculating the sales for Q2, but you can't do that. You have to remember that the launch of these jerseys were done partly pre-Christmas, partly pre-Easter, and then partly through the tournament. So that math doesn't work the way you would like it to work. We said to you 18 months ago that 2023 was about kind of establishing a break-even company and try to get to know each other and start on the journey. We then promised you that 2024 we should be a better company. And I think when we look through the revenue that we have for Q2, I think we can say we are pleased with what we have achieved. Even in North America where the total business was down 8%, currency neutral, the underlying business for the first time in a long, long time is up, so the business is up 2%. Europe on a fantastic drive, up 19% in total, up 24% in the underlying. China, 9% both on the total and the underlying business. And I think I have to say that we're taking market share now every month in China. And in a difficult market, but many, many things have changed over the last four years. I'm very, very proud what the team is actually achieving. Japan and South Korea up six in total, up 10 in the underlying business, also strong development. And then LATAM still on a high roll of 33 and 34. Emerging markets up 25 and 28. And that gives you then the numbers that you already know, currency neutral growth at 11 and the underlying business being up 16. I'll give you just quickly here without any animation the first half. You see North America being down minus 6, the underlying minus 5. So there you see the improvement from Q1 to Q2. Europe, 17 for both. Great China, 8 for both. Japan, South Korea, 7 for both. LATAM 25 for both at emerging markets 21 and 22, and that gives you the total growth at 10 and the underlying at 10, which then includes Q1 and Q2. Back to Q2, the wholesale business for the first time in positive territory and very strong, up 17. You remember we had a negative order book for a while, and of course now we have a big interest both on the brand and on the products for our retail partners. And that caused then this, I call it almost enormous growth of 17% because that was, of course, not planned. And, of course, we are struggling to deliver the demand that we currently have from our retail partners. But it shows that the retail partners is, again, interesting to work with us. And we, of course, very interested to work with them closer than what we have done in the past. Our own retail, OP15, again, very strong and very proud to see that our concept stores, the full-price stores, is growing even faster than that because that shows you that when we put together our lifestyle product, both from originals and from sportswear together with performance, the consumer is coming and she and he is also buying. Ecom, a negative number in total, minus six, but if you take EC out, we're up 31, and this is where you, of course, have to remember that all the EC sales in Q2 last year were almost all going through Ecom. That's the reason for this difference. That gives you a 59-41 split between wholesale and retail. And on the D2C, it's almost split equal with retail being 22 and e-com being 19. And I think this is, under the current circumstances and our current partnership, a healthy mix. A lot of good things happening in front of the consumer, both in our own stores but also with our retail partners. You see here some examples of, for example, the GAD activation in Paris. You see the food locker activation we did in Berlin. And you see some great space in South Korea having, again, I have to say that the brand probably looks the best ever on the lifestyle side in South Korea, which we'll go back to in a second. And then two things which I would ask you to have a look at. There's a new store in the stadium at the Bernabeu at Real Madrid, three times bigger than it used to be. Fantastic development where you can really see both Real Madrid and Adidas as a brand. And then very proudly we opened our Champs-Élysées store on time, three weeks before the Olympics. Great, great achievement for our retail team that we managed that. And because we are so proud of it, here is a 50-second video of the store with no sound and no customers. It's the only time you will see it like this, and I urge you to take a look when you are in town. So I hope you liked it. As I said, 2,800 square meters full of adidas products and in an environment and a location which is great. And again, I repeat, very proud of it. If you then look at the divisions, continued growth in football of 17%, both growth in performance, added lifestyle, apparel for the first time growing in a long, long time by plus six. It's not only football, but of course, football and football culture is part of it. And then the only negative number is accessories with minus eight. There's many one-time reasons for that. We had some big FIFA deals last year that caused high numbers. And we have had some issues with our licensee in the US. I think that we also have to admit that we haven't prioritized accessories. We have been very focused on turning the foot for an apparel business. And I'm pretty optimistic that when we get into next year, you will start to see also accessories in positive numbers. That gives you the split of 61 footwear, 33 apparel, and 6 accessories. Again, footwear should always be more than 50%, and we know it's more difficult to grow in footwear than apparel. So again, very, what should I say, I would say proud, but feel very good about that split. If you then look a little bit at the consumer groups, the lifestyle side led by original basketball partnerships and skateboarding being up 16. If you take Yeezy out, even 34. So here you see how we've been able to replace the Yeezy business then with Adidas branded business. If you look at sportswear, which is everything that does not have the original logo but still is lifestyle, that also includes the lower price points. You see for the first time in a long, long time also in positive territory. And then our performance business of 14, of course, led by football, but we also have positive numbers in basketball performance. We have positive numbers in running, which you know is very, very important for us. When it gets to the lifestyle, we showed up at Fashion Week in Paris with our own show with Y3 for the first time in three years, nine, five years, sorry. Very important for us to showcase that side of the brand. You know that also Japan and also Real Madrid partly played with the Y3 logo, so we're starting to use our design wear also into sports. We did some or actually a lot of activities also during the week, for example, with Wales Bonner. And then Farrell came out and supported us with some of the new launches, both showcasing low profile and superstar. And then at the opening in Paris, you clearly saw him bearing the evil, very proud, and he loves that shoe and the technology, so there's more to come on that side. And when you look upstairs, you see a group of celebrities from sports and culture that joined us for the night before the opening. We have an Adidas house which you are happy to visit downtown Paris where every day, every evening we have a lot of our friends and family coming. It's really, really cool because Adidas is something very special when it gets to the Olympics. The way we merge the history with present and how we merge fashion and music culture with sports. Many of you are looking at our products, and I also hear some noises that says it's too risky what we're doing. So I want to explain to you again what we have told you. We said we were scaling up Terra starting with Samba, then going to Gazelle and Hamba Special. Currently, the demand is still higher than supply, so there's no risk on this currently. Then we extended it into Campus, which is not a Terra shoe, but it's coming out of Skate, a more puffy look, also, what should I say, more trending towards men. And then what you should not forget, we said the retro running is the next silo. We did it with SL72. And yes, there was some noise and we did some mistakes. But happy to report that the shoe is a bestseller in retail and the volumes are really starting to grow. So this will also be a big franchise for us, both for men and women. And the good thing is that the current sell-through is higher on men than on women. So a great, what should I say, franchise for the future. We then have the whole low-profile area, which we have talked about. It's a trend that we see coming out of martial sports like Taekwondo, but also out-of-border sports. And as you know, we have a lot of history here. And it's great to see that there is still a lot of activity, which was underlining the trend. We see the sell-through in Korea, which is the leading trend country, is strong. It's not scaled up yet, so there's not really in the numbers, but it is a trend that I think you should watch. And as you know, with the three-stripe heat we have, we think we can play a major role in this trend in the next 12 months. And I think you will see, especially in spring-summer 2025, that's also a scalable trend. We talked about lifestyle running. That is a leg that we need to get going again. We have five, six projects that it's on the way, and as I said, again, they're coming at the back end of the year and meant to be scaled and during 25. You see the Aruku here, which is currently being reviewed very well, and there's more to come on this side. And then finally, we have the superstar, which you know is the most selling shoe we have in our family. We told you that we are cleaning the market, that we're starting to rebuild the heat on it, but we're not scaling it currently because, let's face it, we don't need it right now. But there are many versions of this now in the marketplace on the high, high end with very, very little supply. And we clearly see that the heat is growing. And at the point in time, we will tell you that we will let it go. In general, and I hope you see the same, Three Stripes, both on footwear and apparel, and we as a brand, are really showing up in the streets. We clearly see on apparel that track tops and pants are trending. You see it more in the streets than you see it in the trend because, as you know, apparel into the retail partners didn't really grow until now. But now in our own channels and also in retail partners, the pictures you see here is really the picture that people want. And there's currently a big, big demand built up in these kind of products. What I'm also really proud of is this. We know that soccer and football has never been really lifestyle drivers. It's come more from basketball. But over the last month, our teams, by taking old jerseys, new jerseys, combining it with lifestyle pieces, We have generated this soccer street culture. And, of course, there's only one brand who can own that, and that's we. And you will see more of this, and you will also see the original logo also on the performance side with some of our clubs. And I think we're on to something really, really interesting here because of the heritage of football is, of course, Adidas football. And it looks good, and it's both male and female, and it's actually global. So I'm very, very proud what the teams both in soccer and in originals have done here. So to sum it up, proud and feel very good about our lifestyle portfolio. But as you know, we are a performance brand, and it's not true that we're not investing in performance. It's also not true that we're not growing in performance. And when you look at the offers we have, I think in football, you know, with the F50, with the Predator, and with Copa, I personally believe we have the three best silos in the industry. We see the growth there, and we feel very, very good about our products. In running, we have overinvested compared to the business. We have the Evo, which is probably the most innovative, what should I say, running shoe in the market. Today, for example, the Olympic gold winner in triathlon, the female side, won in the Evo. And, you know, most, what should I say, marathons and half marathons are won actually by the Evo. We also have reintroduced the UltraBoost 5. We have Pro4 coming in Audi Zero, and we have the Supernova for the specialty. And this is only part of what we have because our off-road running is very, very wide and deep, and you will see us growing there in the future. Training, a category which is very important. For the first time in a long time, we have the Drop Set 3 as a global shoe, actually selling very low markets. And our positioning in strength is starting to also gain market share both for her and for him. So you will also see more of us in training, which of course is a huge category when you look at it from a global point of view. Especially sports, the sum of many, many sports. You remember big discussion if we should focus on fewer sports or more sports. And I think when you see this picture, we definitely want to go back again to the DDoS days where we dominated visibility also at the smaller sports. And you see already the Olympics where we participate in 41 different sports when it gets to footwear. And you will see us work directly or with licensees to have visibility and be a brand that really connects to the athlete also in smaller sports. Outdoor, happy to say that I think on the top end of trail running with the agrarian speed, we have the best innovation in the market. We're starting to do takedowns, and we actually believe in outdoor both on foot and apparel, and it's an important category for us that we know we can improve both our distribution and our marketing. Golf, great growth, you know, during COVID or coming out of COVID. a more stagnant market after that. But same here, both on footwear and apparel, we are taking market share and are very, very, what should I say, aggressive in the market. And also don't forget that the apparel side of golf is also a lifestyle driver for a certain consumer, and that's why we will continue to invest in golf. And then we have the target to become, again, a very important sports band in the U.S. market. To do that, you need to be visible in the American sports. Here you see both baseball and American football as very important. We signed Texas Tech because it's the college where Mahomes came out, great activation there. And in general, the new team in America is investing more in American sports, and I think you will see that over the next months and quarters that the visibility will go up. Basketball, probably the most difficult category for a European brand to be successful in. We have now three franchises that are working, the Anthony Edwards, the Harden, and the Dunn Sixth. That means that for the first time in a long, long time, we have sell-throughs with our retail partners that they really appreciate. And I really, really can promise you that investment in basketball, both from a product development and the visibility with players, are increasing. We're getting some credit for the things we do on the performance side, both here with basketball, because the sell-through is good, or in running. probably be in the shoe of the year in most markets also here as you can see in China. Our teams, although the soccer season for the clubs are over, we did actually win quite some tournaments and leagues and cups in the last season. Now we are in the preparation for the next season and of course with high ambitions with our clubs. I've said many, many times that India cricket is important for us, and you know they won the cricket T20 World Cup, which we were very proud of. We have signed and supported many athletes who have done great performances before the Olympics, and I'm 100% sure that you will see that continue into the Olympics. And then in the last quarter, we have signed quite some athletes, many of them in the U.S., And we have signed teams and federations. Maybe you would like to look again at Aston Villa, you know, Champions League club, Eintracht Frankfurt here in Germany. I mentioned already Texas Tech. I'm totally new. The German Hockey Federation will also change to three stripes. So a lot of exciting things in smaller and in bigger sports. Four extensions that are important for us, Candice Parker, maybe the best female basketball player has stopped playing, but she has now joined us being in charge of women's basketball, so a clear commitment to that sport and who could be better at leading it as her. Anthony Edwards, we have extended the contract. I think personally he's the future of the NBA. We also extended the Olympic partnership with the team Great Britain. And then very important, we have assured Argentina to playing with three stripes until at least 2038. So from a timing point of view, I think that was also close to perfect. And then finally, you probably saw the Olympics yesterday. The female team from New Zealand won the Olympic gold. And we are actually just now celebrating the 25th anniversary with them. So a short video showing a little bit of the team spirit of them.

And that's translated into a perfect night for rugby. Some of the best on the international field. Thank you. Can't breathe!

Thank you. Thank you. Thank you.

Again, for me, the Black Ferns and the All Blacks, probably the two teams with the biggest team spirit that you can talk about. We had All Blacks here in the training camp before the World Cup, where they unfortunately lost the final, and we worked very, very closely with the Black Ferns, and congratulations to their Olympic gold medal yesterday. I think with that, I give over to Harm to take you through the details of the numbers.

Thank you, Bjorn, and warm welcome also from my side. And as you know, with a new focus on the product and a better go-to-market process, this is being reflected positively in the financials as well. And I want to give you some more details on how they developed. First and foremost, Bjorn mentioned that already on the net sales, we are growing 11% currency neutral. If you exclude the easy revenues in both years, then actually the underlying business, which is more an indication for the future, was already growing 16% currency neutral in the second quarter. Even more important is the gross profit. You see here that 10 basis points down compared to prior year, but I want to decompose that a little bit. Also, the Yeezy effect here. If you start on the left-hand side, if I take the Yeezy business out from last year, that was contributing roughly 200 basis points to the gross margin. So really the underlying business was 49%. If you do the same math on the Q2 2024, you see it would be 50.5% as the impact was much smaller in 2024, the second quarter of Yeezy. So that gives you the mathematical calculation of 1.5 percentage points improvement on the underlying gross margin. What is it driven by? I mean, first of all, we talked about freight quite a bit in the past. So freight are better. Product costs are improving as well as we are filling the factories, have a better utilization with our partners. We have less discounting, as we mentioned many, many times. We have an improved product mix, and, of course, originals play a role here. We have some impact on inventory provisions because the aging of the inventory is much better. And we talked about, you know, currencies as well at the beginning of the year when we gave the guidance. We always said at three to four percentage points in gross margin impact, I believe it's fair to say the first quarter was more at the higher end of that impact, and the second quarter was the lower end of that impact of 3 to 4 percent. That's really what's in the gross margin. To go further down on the P&L, I want to highlight the marketing expenses. We actually spent $90 million, absolute more, in the second quarter compared to last year. That is given all the brand campaigns and the product launches that we have done. That led to an increase in the ratio of 12.1%. We always said in the future, plan in your models around 12% of marketing. We don't want to save there to get to our 10% profitability by 2026. And what we really need to work on is the operating overhead and the overall infrastructure. You see here that we're 2% down or 25 million down, actually 35 million down to 33.2%. To be transparent here, of course, we had some one times last year that didn't repeat. We had roughly 110 million donations and 50 million of strategic reviews last year. So to full transparency, we're actually slightly up. but we are still leveraging over the top line growth, and that is one of the plans towards 2026 as well, to get more leverage in the future out of our infrastructure as we keep growing double-digit. That all led to an operating profit of $346 million, and also there, there's only $50 million contribution of EASY in there, but also there, full transparency what the impact of EASY is. If you go further down the line from operating profit to net income, you see in the second quarter, you know, unlike the first quarter, the financial income expenses have normalized compared to last year. We had some, you know, one-offs in Q124 that were made transparent. And then also when it comes to the income taxes, we are now at 30.5%. And also that is a clear indication for the full year. I can give a commitment today that we will be, with our new guidance of $1 billion operating profit, we will be below 30% tax rate, and we are further normalizing that ratio as well. And overall, the second quarter now leads to $211 million net income, which is more than doubling from last year. Let me go further down to the balance sheet, talking about inventories. Again, big, big improvement, a billion or 70% currency neutral down. If I go a little deeper here, you probably remember end of 22, we had 6 billion inventory. If I compare to the respective quarter last year, we had a billion down. And now at 4.5 billion, there's around 150 million Yeezy inventory still left that we want to sell at cost for the remaining months to come. But again, rest assured, 4.5 billion is very healthy. It's a good aging. It's across the board, including ZIS. We have healthy inventories now. And expect with the growth profile that we have, not just in the second half, but going into 2025, that this number will increase over the quarters to come. So it's very, very healthy. And a lot of work has been done around the world with a lot of teams dedicated to this one. Of course, as we are growing the wholesale business for the first time in quite a while, the receivables are going up slightly, but even less than our wholesale growth, with 10% currency neutral up. That is expected. It's the same with accounts payable, as we are sourcing more product for our growth in the future, so also that 70% up. But with the tremendous effort on inventories and accounts receivables and accounts payables kind of balancing out, our working capital improved significantly as well. If you put that in comparison to the past, we had in Q2 23 to 27.1% working capital over net sales. Now we're down to 21.7%. That is already better than the guidance that we gave at the beginning of the year of 23 to 24%, and we are very optimistic for the remainder of the year. Hence, we changed our guidance and upgraded to 21 to 22%. Just for everyone again, I always have been on record, if you get this number below 20%, we're not just a good, but really a very, very healthy company. And that is, of course, the goal for the future, that we get this one ideally below 20%. But the guidance for now, for this year, 21% to 22%. Of course, it helped us also on the cash and cash equivalents. We are now up to 1.7 billion almost, 67% up. It's very healthy. I always said we want to get above 1.5 billion. We have achieved that faster than what we would have expected. That also helped us to get a better ratio of our adjusted net borrowings and EBITDA ratio, which is important not just for us operationally, but also for S&P and Moody's. Our commitment to both rating companies and my personal commitment is to get this ratio below 2.0, which is a very healthy level. That's a level that we had in the past. And you see the progress that we have made. I'm not promising it for this year, but I'm clearly getting there next year. But there are still, you know, some months to go this year. So let's see. But you see that both adjusted net borrowings improved significantly, you know, and also the EBITDA ratio improved significantly now. So with that, I want to hand over to Bjorn again. And I'm pretty sure he has some questions later. But let's go through the guidance first.

Thanks, Harm. And then to explain to you the steps that we've taken, we are using this slide again. Remember, in March, we said we would go mid-single-digit. Then we increased it after a while, saying mid to high. And now, on July 16th, at Hawk, we said high single-digit increase. The same for the profitability. We started at 500, then we increased to 700, and now we are around a billion. The assumption for this is as follows. It means selling the remaining yeast inventory at cost, and we have around 150 million left of the inventory. That means we are currently not assuming any operating profit or any contribution on that inventory. We still expect to have strong FX headwind, and you know that has an impact both on the top line and on the gross margin. And we will continue to invest in the future and not try to look good from the numbers. That means we will continue to invest and maybe overinvest compared to durations when it gets to marketing and sales. Again, to explain to you the EEC so there's no misunderstandings, the – yeah. The contribution or the sales we had on Yeezy in the first quarter was 150 million. Then in Q2 as we said it was 200 million. We do expect as we have said repeatedly now to sell the leftover of the inventory at 150 and that would then mean that the total sales of Yeezy products should end around 500 million. On the profit side we had 50 million contribution both in Q1 and Q2. And since we're selling or assume to sell inventory at cost, that means zero contribution in the rest of the year. And that means that you're then ending with an operating contribution of $100 million at the end of the year. If you then look at the impact on the guidance, again, you remember we started at 500 million. Then we had the first drop or the contribution of EEC at 50. And then the underlying business improved by 150. That's why we said that we had a guidance of 700. Then we had another 50 coming from EEC and the underlying business then adding another 250. And that's where you are then at the current guidance of 1 billion. Why do we believe this is possible? Well, of course, it is that the current product we have in the pipeline, both that is in the stores and on the way to the store, is strong, and that we know we are adding commercial product to the trade in the next three to six months. And you see some of the examples here. You do have to understand that some of the growth you had in Q2 also were, you know, demand that could have been delivered into Q3. We didn't pull anything forward to look better, but what we did, of course, was to try to use whatever retail or whatever inventory we had to fulfill demand. So I urge you not to believe that 16% underlying will be 25% in the next quarter because we won't have the product for it. And it's pretty, pretty obvious that the demand currently on many product types are higher than what we are going to supply. Just have that in your mind. And then remember we said 23, break even company, 24, a better company, and then 25, we think we should be a good company, and then in 26, we promise you to be a healthy company, and we define that to be a double-digit growing company that has 50 to 52% gross margin, that's where we already are, that continue to invest around 12% in marketing working budget, and then have An operating ratio of around 30% and of course that is the challenge because that has two aspects. It has the growth and it has the efficiency and the cost line. We think this is all achievable and that brings you then to what we call a healthy margin of 10% EBIT which is what we expect to do. Again, we are in the middle of Paris. I think, personally, it's been a great start to the event. I think it's been great at the opening ceremony. The stadiums are full. The atmosphere in the city is good. And, of course, we, as Adidas, also look great. We have told you many times that we have shoes, 49 different shoe models for 41 different disciplines. We have added federations and we have added athletes. Of course, we always wish we had more, and I'm sure we will have more in the future, but so far I think the brand is looking great, and all feedback we're getting both from people interested in sports, the athletes, and even from retail is great. I did already mention to you Farrell showing up in the Evo shoe at the opening, and if you look good, Zidane was also, of course, in Adidas shoes, although a triple white because we were not allowed to show the stripes, and Zidane is a very disciplined guy. But again, he looked great, and he's a very, very, very important member of our family. So far... The Olympics has been great. I think we won 12 or 13 gold medals so far and in many of the smaller sports. And again, I cannot say how happy I am that the Olympics are going on. I think it's the right time and I think it's a big, big party after the Euro and Copa and I hope you all celebrate it as we are doing. So with that, I think we can conclude that we are, as a management, happy where we are through 2024. I think we have turned the brand quicker around in front of the consumer that we had even hoped for. You know to turn around a company is always a matter of how much time you have, and I think I personally have had luck with the timing. The timing is always crucial. And then I think the team has worked very, very hard to do this. And I think we can showcase that some of the things we're doing is really working. We all know we have a lot of work to do in front of us to be healthy and very good adidas. But I'm convinced we can bring adidas back again to where we used to be and be a very, very good company for the future and the best sports brand that exists. And I think with that I hand back to you.

Thanks, Bjorn. Alice, we would now be ready to take questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. You will hear a tone to confirm that you have answered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questions on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Webcast. Anyone who has a question, we'll start in one at this time. Our first question comes from the line of Susannah Bush with UBS. Please go ahead.

Good afternoon. Thank you for taking my questions. I'll stick to the rule, so just two for me. Maybe the first question on Q3. I understand that, you know, obviously it would be quite unreasonable to extrapolate sort of, you know, your earlier comments that growth would accelerate every quarter. given how impressive Q2 was already. But can you give us an idea of that sort of a mid-teens underlying momentum is something that we could reasonably assume for Q3? Or should we take into account the fact that maybe there were some sort of one-off orders related to the Just so we get an idea if, you know, obviously I hope no one is going to expect 25%, but just to know if that mid-teens growth is something reasonable given the strong brand momentum. And the second question is on gross margin. I guess there was some impression in the morning that maybe your outlook in the press release, there was a comment on the gross margin that maybe it sounded a little bit more cautious on FX. So I was wondering if you could maybe give us an idea of, you know, how we should think about FX and H2, and if specifically, if maybe some of the emerging market currencies, which I believe are usually unhedged, if maybe that is adding a little bit to the gross margin pressure in H2. Thank you.

Yeah, I'll start with the top line. I think that the demand will be very strong also in the second half. I think it's more about supply, to be honest. And, you know, we said to you earlier this year that we expected the air to start flattish and then grow into double digits in the second half. Now we manage double digits in the first half, which was not planned. And, to be honest, we have, of course, struggled to supply that. You also see that the wholesale business growing 17% in the quarter. We started then to give them, what should I say, a product that they hadn't ordered at the beginning of the season, and at the same time our likes for likes are very strong. So I think the demand is going to be higher than what we're going to report in numbers because I don't think supply will be there. So I don't know, to simplify, demand will be double-digit. I think we maybe can reach double-digit, but you shouldn't believe that the sales numbers will be as high as you maybe think based on the numbers we did in Q2. The question is also even if we could supply it, would we supply it because we need to now manage certain franchises in certain markets with certain retailers in a smart way. I think the 10% growth is probably what we promised you at the beginning of the year, double-digit growth in the second half, and I think I would stick to that. And then let's see if there is an upside to it that we can then report after Q3. But we will be a little bit careful of many reasons, which I hope you appreciate. When it gets to FX, I hand over to Harm.

Yes, Susanne, you probably referred to what we had in the press release at the bottom where we said there are significant currency headwinds. That was a generic comment, not especially for H2. We have been one of the first brands saying at the very beginning of the year when we gave our outlook, don't forget the translation impact on FX and the FX impact on the gross margin overall. I just mentioned it earlier in the first half, we had the 3% to 4% currency FX on the gross margin. For the second half, do not worry about the FX. It will get better compared to the first half. There's no doubt. Yes, there are some smaller currencies in emerging markets or Japanese yen that has not developed positively, but overall it's going the right direction. What you should not forget in the second half, there is of course a channel mix that plays a role. We had an unprecedented comp growth in our concept stores, excluding Yeezy. We had 31% e-commerce growth. Again, our strategy is to work with our retail partners. and accelerating the wholesale growth. That is a little impact. And, of course, with the growth in original football, our ambition is to grow running and other categories in the second half. That has a slight category impact. But overall, again, FX is not the factor in the second half compared to the first half. We probably start to get some tailwind there as well, and we are getting all armed for 25 as well. So don't read too much into the bottom of our press release. It's all good.

That's excellent.

Thank you. The next question comes from . Please go ahead.

Thanks very much. Good afternoon. Two questions, please. The first is on China. How would you characterize the Adidas positioning and brand heat in China at the moment? And secondly, on the US, how prepared is Adidas for potential tariffs in China? Perhaps you could give us a sense of how much that you sell in the US comes from Chinese manufacturers.

Thank you. Two good questions. I think you see that we're growing 9% in China in a market that has changed dramatically, I would say, in the last four years. Pre, what should I say, BSI and COVID, it was dominated by the Western brands. Now the local brands have taken a lot of share and have installed business models that are more vertical. Many of them are manufacturers that go down straight to retail with their own stores. So the speed they have and the price value they have for that consumer was different than it was earlier. And we are trying to adjust to that. We have a very strong management that used to be with Adidas that left and worked also for local brands and are now back again. They have, after a very difficult time, showed a lot of energy, a lot of initiatives to improve the business model. And we are going to a model that is more local for local, and it's based on less sell-in and much more, I would say, reaction during the season, both in our own stores, of course, but also with our retail partners, which you have to remember are monobranded stores with Adidas on the outside. So a lot of positive things happening in the market that, of course, is hold back a little bit of the Chinese general economy. But growing 9% and taking share I think is respectable results when you compare it to all the Western brands and we are all very excited about what we know about the future and the energy that the team shows. When it gets to the US and tariffs, we have basically tried not to source any products anymore from China into the US. what should I say, supply chains, plants for the U.S. is not involved in China. So I think we are in good shape should that come. And I think the team has done a lot of work already, which are not based on a possible tariffs, but in general, given the tension, we have kind of steered away from Chinese production into the U.S. market.

Thanks, Graeme.

The next question comes from . Please go ahead.

Yeah, good afternoon, guys. So two for me as well. Apparel, you said it was difficult for us to strip out the impact of , given timing. So I'm not going to ask for an exact figure, but could you please confirm that you were up in uh in a in q2x jersey and also what what are you expecting anticipating uh in terms of the second half as you mentioned that you know the selling and sell out there must be a timing issue given the excess inventory in the trade so that's question number um Number one. And then, so in running, interestingly, so you turned positive in Q2, which I think is a bit earlier than anticipated. Do you feel that you have now the right, you know, product architecture, you know, product launch in place to continue to grow the, you know, the category? And how do you see the competitive landscape there? Because, again, it's, you know, very highly competitive in that specific category. So how optimistic are you about running? Thank you.

I think I can count. That was three questions, not two. You do it in a smart way. The apparel thing, to be honest with you, we hadn't expected growth in apparel yet because we saw the market still being crowded, and we had negative order books on apparel for a long, long period of time. I think what has happened is that given the success we have with the consumer on footwear, especially she has turned to our brand also on apparel, And despite that we had little supply on the best-selling apparel, because we didn't, because the retailers hadn't ordered it, we saw a great growth in our own channels, and that sparked the retailers also to try to get merchandise. And that's why you saw the growth already in Q2. Of course, the soccer jerseys, and the reason we say you can't put it together mathematically is that, remember, we're selling into a tournament six months up front, as though you're selling pre-Christmas and you're selling pre-Easter and you're selling into the tournament and after the tournament. So you can't take those numbers as just add on the top line, which wouldn't have been there if you didn't have the events. So it's a little bit difficult to put the pieces together. I think I can tell you that the interest in apparel from our retail partners and from the consumers is now also growing and that we're starting to see an order book that is growing also in apparel. That's the first time that I see it since I have been there. When it gets to the running business, it is of course a place where we need to grow over time, but it's also the segment where you need to give it time. There are very few running brands that come from nothing to something, especially when you have, what should I say, left the special distribution like we did. So we have to be patient. We have overinvested in products that are for people that want to run fast. So the Evo and the RD Zero range is, in my opinion, the best in the market. The whole comfort running and everyday running were new. What should I say? Brands like Hoka and Onna have done a great job. We didn't have the right product for a while. I think in the architecture now, when you look at both Adistar, you look at Supernova, and you even look at UltraBoost 5, I do actually believe that we have the right product, but of course, we don't have the right distribution, and there you need to give us some time to build the relations and actually place product in front of the consumer with the support from the retailers. So I think we will start and continue to grow slowly, but I think we also have to be careful that we don't expect too much too quick because then we can actually destroy the business. So clear commitment to growing and running globally, clear commitment to continue to invest in both product marketing and events and activations. But also in our plans, we are giving it some, what should I say, patience to not push it to then get, what should I say, backlash. I think that's how I would describe it. Okay. Thank you.

The next question comes from . Please go ahead.

Good afternoon, team. Just one question, please. Can you help us understand What's going on in North America in terms of the behavior of wholesale partners? Is your sense they're trying to run with permanently better inventory, or is this caution in the face of consumer that's temporary? What's really changed or otherwise there from your perspective?

Well, you know, during the supply chain problems when everybody had too little inventory, retailers and brands were doing great because, you know, then we were running on fresh inventory. I think what happened after that was that everybody, including brands and retail, ordered too much, so we were over-inventory. And, you know, when that happens, you have over-discounting. And that's what we've been through the last 18 months. I think I should only speak for Adidas because I don't want to take the words out of other brands. But for us, we worked through a lot of inventory that didn't do well. I mean, we were sitting on inventory in the trade that were not selling great. And, of course, when you're not selling great, they won't buy a lot, and they also discount you, which is not good for, you know, your brand image.

I think we worked through that very, very good.

We have reduced our inventory in the US both in the retail and in our own inventory great. That's why the new inventory that is going out in the market is selling through much, much better than it used to do. I think also our relationship with American retailers with the new management who are Americans are, you know, improving every week we speak. And that's why I think you will see America continuing to grow in the next quarters. And, of course, that's also what we need to do. You have to be more American to be successful in America. You have to be in the American sports. You know, they are baseball, basketball, football, and so certainly we golf. You need to showcase that you are in high school and college sports. And that is, of course, easier when you have an American president in Adidas than having a foreigner. And there is a clear, clear, clear plan how to, what you actually see, be more American in America. And our product pipeline and our marketing activities is lined up to do that. And that's why I feel that we're on the good way. And the goal for all the retailers which we speak to is, of course, to work with less inventory and have, what should I say, partners that can be more flexible in supply, and that's what we're trying to do. So I think we are in a good shape to improve, but, of course, you all know we haven't done a great job before, so maybe people say it's easy. But, again, we have tough competition in the U.S. from American brands, and we have to be better than what we have been before to be successful, and I'm pretty sure we will. Thank you.

The next question comes from the line of Jürgen Kolb. Kepler Sugar, please go ahead.

Yes, thank you very much. Two questions and indeed great additions in terms of teams and clubs, what you just mentioned, Björn. Congrats to that. Two questions.

The only thing you don't know yet is that we're changing the color of Eintracht away from black. No, we're not. I'm just kidding.

Good that you're kidding. First one on the order book, how shall I look at the wholesale orders, which are up 17%? Are retailers ordering less tariffs? I mean, if we just stay within the originals and the leisure lifestyle category, are they ordering less? terrace products and now replace that with ESL, or is ESL really an add-on for, let's say, the summer period when ESL is probably better placed than a campus or whatever? And the second one on basketball, obviously you mentioned how important and relevant it is to be in the American sports. I was missing a little bit maybe a comment on J.R. Lorenzo and the Fear of God Corporation and how that is performing. Maybe a quick word on how happy you are with that part of the business. Thank you.

Well, first of all, the 70% is not the order book. The 70% is what we achieved with our retail partners, meaning wholesaling Q2. So that's the current growth. The order book that we have with our retail partner has been growing each quarter, and it is a very strong order book for the next two quarters as well. The question is, are we going to deliver that whole order book or not? And there are many factors that, what should I say, affect that decision. The order book on tariffs, you have to remember that that's been growing all the time. We would never have had these sales numbers on tariffs if we just fulfilled the order book. We have had much more demand than what people ordered 12, 9, and 6 months ago because it's increasing all the time and people are placing orders on tariffs way more than the timelines show. So we are hunting demand on tariffs still But when you look at what they are offering on the space, it's not that they're replacing Terrace with SL72. It's clearly in addition. The Terrace look and the campus look and the SL72, which in all of the brands will be a retro running look, is complementary to each other. That means that you're getting more retail space. So we don't see any cannibalization yet on the demand when it gets to what is hot in the marketplace yet. And, of course, as soon as we see that, we will then start to manage supply in a different way. But right now we're still chasing demand. Basketball, I didn't mention, Jerry, because I'm so happy with what you see on, I would say, the NBA franchise signature models, you know, Tony Mitchell, Anthony Edwards, and Harden, and that is for us, I would say, a real connection between NBA and what you see in the store and the sell-through. The Jerry Lorenzo thing has been complicated because it's taken a long, long time to get the products in the marketplace. It's a combination of lifestyle and lifestyle performance. It did extremely well when we launched it on, I would say, Japan, China, and parts of the U.S., but you know the collection was two years delayed. So right now we have shrunk it to make sure that supply is not bigger than demand, and we manage it now on a much, much, what should I say, narrower distribution than I think the plans were three, four years ago. The good thing is that we don't need to do it wider right now, and by doing it more narrow and higher price points, I think it will actually help us tremendously on brand heat because we don't need to push it commercially. So it's a change that has happened over time given the circumstances, and that's the reason why we don't talk a lot about it because we want to deliver and not talk. I think that's a fair quote.

Good quote. Thank you very much.

The next question comes from the line of Anisha Sherlan, Bernstein. Please go ahead.

Thank you. So I want to dig a little bit into gross margin, please. You've seen some structural improvements in price mix and margin mix this quarter. Q4 is typically a very promotional quarter. Are you expecting some of these structural improvements to change what Q4 looks like this year, given the current momentum? And then as you go into 2025, you're ramping up wholesale order books. and you're ramping up takedown versions of tariffs, and both of those are gross margin headwinds. Your medium-term guidance implies about flattish gross margin. Can you talk through some of the puts and takes, you know, some of the headwinds and tailwinds into that flattish margin guidance? Thank you so much.

Well, I can start, and Harm, you can adjust me if I say something wrong. First of all, the goal is not to get gross margin to 55%, 56%. It's not like we're trying to maximize this. I think when we say we are between 50% and 52%, it's because when we look at the distribution we have in the categories, we think that's a safe place to be. And then there's an upside to it as soon as, you know, currencies go in a different direction. I think that's fair to say. When you look at the wholesale retail mix, you have to remember that when we want to be the best partner of the retailers, we also have to make sure that we give them conditions and that makes them happy. And we do not prioritize our own D2C just because we could have a higher margin. What we're doing now is that we make sure that our retail partner gets the product at the same time. We even gave them more of the good stuff to please them. If not, we would not have been able to grow them 17%. When it gets to the takedowns of tariffs and tariffs, yes, they both have high margins. There's no doubt about it. But I think any takedown that we do also on retro running will have the same issue because I think we're pretty good at engineering takedowns of what is hot upstairs. I don't think that has any negative impact, to be honest. It is true that when we start to grow certain performance categories over proportionally, that could have a negative impact on margin, but right now, and I'm looking at harm, I don't really any reason why we should have big negative variances on gross margin going into next year unless there are things happening in the markets when it gets to inflation and FX that Harm is a better expert to talk about than me.

The good news is I can confirm what Bjorn said. He didn't say anything wrong. So we have good margins also on the take-down version. There's no reason to structurally have any changes going to next year as well. But you're absolutely right, Anisha, in the fourth quarter we have commercial moments. We have singles day, doubles day, we have Black Friday, and all these events have been They extended in the past, so it's not just one day. It's actually a week or two weeks now. We want to participate in that. That's why the margin is always slightly lower in the fourth quarter, but that's affected to our guidance. What we need to be aware of is that we need to differentiate between year-over-year improvements versus quarter-over-quarter improvements. And I think the year-over-year improvements will get smaller as we get better every quarter. And, of course, quarter-over-quarter, we want to stabilize where we are. And, of course, you know, build on that, you know, marking over time. But we are not too worried about quarter by quarter. But we are getting prepared for what we want to do in 25, then 26. But you are right. On Q4, it will be slightly lower. But overall, it's going in the right direction. And structurally, nothing is really fundamentally changing. And also where the main currencies are going and how we are hedged going into 25. At least on the dollar, we don't see a headwind going into 25. That's also an important news.

Thank you.

The next question comes from the land of . RBC, please go ahead.

Okay.

Thank you. Good afternoon, everybody. So two from me as well, please. The first is, could you just comment on current trading, if possible, in July and whether you've seen any negative impact from the SL72 marketing campaign where, as you alluded to, a few mistakes were made in terms of brand momentum or sell-through rates? And secondly, just in terms of the channel dynamics, you have touched on it already, but could you just help us understand whether we should expect wholesale and DTC growth rates to maintain a similar trajectory as we've seen in Q2, just given the way that you're allocating product to both channels? And perhaps within the second quarter, just any comment on the DTC growth rate and whether full price was a performing outlet? Thank you.

I think that was three questions. The easy one, the first one, current rating is good. The mistake we did on SL72 has had no impact on current rating, neither in general nor on the model itself. When it gets to the channel dynamics going forward between wholesale and retail, You need to know, and I'm sure you do, is that when you have an order book that are orders and you can deliver, that's a fixed number that you can deliver in. And as long as it sells through, there's no cancellations and take-backs. And I feel very comfortable that we will fulfill the order book and we will have, I say, a solid development on our wholesale business. When it gets to the retail business, that depends on your like-for-like development. The like-for-like development that we've had the first six months has been unbelievable. I don't think I've seen such like-for-like numbers in our concept stores at any time. They've been very, very high. And, of course, you can never promise or plan for that. You supply the products into the store, you hope they sell, and then depending on how good or bad it is, you replenish or you adjust your inventory. So I'm certain about the wholesale business, and then on the retail business, it depends on how the consumer and our supply continues. When it gets to the DTC business in the second quarter, our concept stores were much, much higher than our factory outlets, and that is very, very logic. We have new and fresh merchandise going into our concept stores. And the factory outlets, we have basically cleared all the inventory. I have not made any buys for the outlets, so a much, much higher performance on concept stores than on outlets, which is a great place to be in. There has been times where it's been different, but very happy with that.

Great. Thank you.

The next question comes from the line of Monique Pollard, City. Please go ahead.

Hi, afternoon, everyone. Two questions for me, if I can.

The first one, Bjorn, was just, I feel like some people, or the incoming I'm getting to, some people misunderstood potentially your comments on the growth rates for the rest of the year. They're not sure whether the double digit in growth in the second half was supposed to that was supposed to come in the second half if you were saying that some of it actually came in the first half. So if you could just confirm that you're still confident in the double-digit growth rate for the second half, if you are, that would be helpful. And the second question I had was just whether you can give Any understanding or insight into whether, you know, you had to put on extra shipments presumably in the second quarter given that, you know, surprising strength in the wholesale performance and the impact that had on your gross margin, you know, with you having to pay potentially spot rates rather than contracted rates?

Yes, there shouldn't be any misunderstanding. I'm confident on double-digit growth in the second half, as we promised you. What I said, that some of the orders that were meant for Q3 was actually delivered in Q2 because our retail partner was screaming for product. That's what I tried to say. But the demand will be double-digit in the second half, 100%, and I think also that we will fulfill it soon. When it gets to the shipment cost, yes. Of course, there has been extra costs and extra work to fulfill the demand without supply, so that is correct. But the impact on the margin, I don't think we should start to calculate it because when you grow, there is always higher, I would say, supply costs, and we've had them. You know we have them also because of the Red Sea issue. and there are currently a combination of contractual rates and spot rates. That's a normal part of our life, so we also calculate it that way. I hope we will one day be in a supply chain situation that we will only use contractual rates, but let's face it, we haven't been there for the last four years, so I don't know when that will happen. But, yes, there has been some extra cost given high demand and given the situation in the Red Sea. That is correct.

Perfect. Thank you.

Alice, we have time for two more questions.

Thanks. The next question comes from the line of Jonathan Combs. Baird, please go ahead.

Yes, hi. Thank you. Two questions for me. First, could you talk a little bit more about your expectations for growth in North America even better than the second half and how we should think about the key drivers in the North America market? And then separately, just given the discussion about faster top-line acceleration, could you comment on whether you're thinking about the achievement of your mid-term EBIT margin target, if the timeline for that has changed at all, or how you're thinking about the rate of reinvestment given the strong top-line performance? Thank you.

I think what we have said and what we feel comfortable is to grow 10% and have a control growth because that's easier than suddenly growing 16% or 20% and lose the control. So think about 10% and what we're going to grow in the mid-term because that's what we are planning to do. And then we will have to see if certain categories are taking off. We shouldn't be willing to take the extra sales by actually taking the risk of oversupplying at the end, but we're shooting for 10%. That also means that the mid-term, what should I say, goal is the same. We haven't changed, what should I say, that should it come earlier or should it be a quarter later? I don't think it's really important. Important is that you believe that we are a 10% EBIT brand over time and that we will stay there, not that we reach it for one year and then what happens afterwards no one cares about. I think Adidas, with the business model and the brand and the strength we have, should always be a double-digit, A-bit company, and we have all the tools to do that. But important is that when we do it, we stay on that level and not over-inventory ourselves or whatever so that we're falling down again. When it gets to North America, important is to stop the downfall. Important is to clear the inventory. Important is to build the relationship with the retailers. Important is to be visible in American sports. And that's all the things we are doing. When the growth is then coming at double digits, I think it would be wrong to tell you. I don't want to put our organization into the pressure of hitting a growth target at a certain week or month because I think the same thing is irrelevant. The important thing is that we're changing all the things that brought us into that problem. That means, again, showing up in American sports. It means working very closely with American retailers as a partner. That means that having a pipeline of product that is meant to sell in the U.S. and not a product that was decided in Germany that you should sell. And all these things are strong enough that I'm very, very confident that we can take market share with our brand in the American market short term and especially over mid and long term. And that must be the goal. It's obvious that we have a history in America, both in sports and sports culture, but also in street culture. When you go back, that is very strong. If you play to that, both of the lifestyle, the comfort and the performance side, I think we can be a very, very strong brand in the American market, knowing that, of course, our strongest competitor has a market position that is very, very strong and full respect for what they've done. But we are confident that we have tools to be much stronger in the U.S. than we currently are.

Hello?

We'll take the next question coming from the line of . Please go ahead.

Thank you for putting me in this Q&A. I just have one, as most of the questions have been answered, so in the interest of time or so. It is on Europe. We've kept being quite surprised on the strong rates in Europe, and you've had another very strong quarter. I'd be interested in any color in how you improve penetration with key accounts. What's your roadmap in Europe and how you see the region growing? even after the football event. Thank you very much.

Well, I think what we did 18 months ago was to invite all the key retailers on campus. They hadn't been here for a long period of time, and we committed to them that we will be, what should I say, a supporter of their business and not the competitor, and that the D2C focus were not there anymore. I think there was a lot of skepticism among many of them. And, of course, they didn't, what should I say, jump the first weeks and ordered. But then what happened, and this is what I mean by luck and timing, is that suddenly the brand, with everything that has happened, started to be hot in certain categories. And you know a retail partner that, A, is skeptical to you, but, C, that you are, what should I say, in certain categories very, very hot, will start to move towards you. And I think we utilized that brand heat and the hotness of certain products to build the relationship again, and now they trust us. The same retailers are almost here now monthly. We have them at the Euro. We have them at the Olympics. We work very, very closely on looking at their inventory and sell-throughs. They're part of discussing, you know, the longevity of the different franchises. We are very, very, very conscious about talking about Samba and Taras in general and measuring, you know, traffic, sell-through, conversion, social search on their channels to see when we should slow down supply. They support us currently on the introduction of new franchises like the Compass, like the SL, and even building plans for low profile. They have seen all our, what should I say, investment in innovation in running lifestyle, so they have full visibility of the next 18 months. And we all know that we are having the superstar in the back pocket. On the lifestyle side, I would say fantastic. All retailers that I can name in Europe, a very good relationship. When it gets to the performance side, which we know takes a longer time, on soccer, I mean football, I mean it's on fire, same thing. On running, of course, a slower development in the sense that they have had success with other brands, and we have to accept that we are a little bit further down in the queue. But same thing here. They work with our product team. We are very, very close in monitoring the success or non-success. We are giving them exclusivity, and we are building SMUs. So it's the same partnerships that is happening. I think training, the same thing, especially on her. You know, when the brand is hot, she also wants to buy you for her sports. So we see a positive trend. Outdoor, I would say a lot of adjustments in the way we go to market. Footrest strong, but a lot of work to do in apparel. But same thing, working closer with the retailer. Basketball, I mean, they basically follow what happens in the U.S. If you're successful with franchises in the U.S., they will buy and sell the same, so it's a one-to-one relationship. And then on everything that is takedowns, and I would call it non-originals, which we do in sportswear, It's been a negative trend for a long time as we try to sell it at its own label. The interest in that now is very, very strong. On apparel, we're launching the set as we speak. Of course, the weather for a fleece range is far too high, but big interest and we will have great visibility when we get to September. All the takedowns we're doing, I don't need to tell you that they are in the same demand right now as what the originals are. I would say in Europe, relationship, the way we go to market and the current results, both from a sell-in and sell-out, and the way we look in retail, I have never seen such a quick change, and that's what I mean by luck. That's not something that you can plan and believe in. You can plan it and hope it happens, but I think the success for them and for us has been higher than what we could hope for. Thank you very much. Also in your country. I hope you see it.

All right. Thanks very much, Cedric. Thanks very much, Alice. Thanks very much, Bjorn and Harm. And also thanks very much to all of you for participating in our call today. This concludes our call for the Q2 2024 results. As always, if there's any open questions, please feel free to reach out to Adrian, Philip, myself, or any other member of the IR team. And with that, thanks very much again. Enjoy the summer of sports. Enjoy the Olympics. If you happen to be in Paris, you heard it from Björn, your first stop should be our new Champs-Élysées store. And, of course, we're also happy to invite you to our Adidas house if you happen to have some time. And now enjoy your well-deserved summer break. All the best. Bye-bye. Take care.