Samsonite International S.A. (SEHK: 1910), the world-renowned luggage manufacturer, has announced its interim results for the first half of 2024, displaying resilient performance with a 2.8% increase in sales to $1.76 billion. The company's gross margin has reached a record 60.2%, with a notable adjusted EBITDA of $333 million.
Despite facing softer consumer sentiment and competitive pressures in certain markets, Samsonite has maintained a strong focus on innovation, sustainability, and strategic growth initiatives, including pursuing a dual listing in the United States.
Key Takeaways
- Samsonite International achieved a 2.8% sales growth and a record gross margin of 60.2% in the first half of 2024.
- The company announced a dual listing in the United States to improve liquidity and shareholder accessibility.
- Global travel remains robust, but the premium and luxury sectors, including the Tumi brand, have seen weaker demand.
- Samsonite's mid-market segment and core brand have shown strong growth, while American Tourister faces increased competition in India.
- The company is committed to innovation and sustainability, launching new products and focusing on science-based targets for carbon emissions.
- Advertising investments have increased to 6.6% of net sales, and a $200 million share buyback program has been announced.
Company Outlook
- Samsonite plans to introduce new products and store openings for Tumi and American Tourister.
- The company remains focused on driving quality sales and maintaining long-term profitability.
- Regional performance varies, with Asia, Europe, and Latin America showing growth, while North America and India face challenges.
- Samsonite anticipates mid to upper single-digit growth for 2025, contingent on consumer sentiment and travel trends.
Bearish Highlights
- Consumer sentiment softened in the second quarter, leading to a slower sales trend.
- The premium and luxury sectors, particularly the Tumi brand, experienced weaker demand.
- American Tourister sales in India declined by 9% due to competitive discounting.
Bullish Highlights
- The mid-market segment, where Samsonite is a key player, grew by 5.8%.
- The core Samsonite brand delivered robust growth across all regions.
- Latin America saw a strong revenue growth of 20.3%.
- Direct-to-consumer e-commerce sales increased by 10% for the half.
Misses
- Net sales in India declined by 10.6% compared to the previous year.
- North America sales remained flat year-over-year, with the Tumi brand experiencing a slight decline.
- Comparable store sales decreased by 1.4%.
Q&A Highlights
- The company is targeting around 7% spend in advertising to drive future net sales growth.
- Executives are optimistic about the resilience of the travel industry and expect further recovery in Asian travel next year.
- Samsonite is not overly concerned about the medium-term sales environment in India and expects to navigate through it.
- The company has reduced debt and plans to return cash to shareholders through dividends and share repurchases.
In conclusion, Samsonite International is navigating a mixed market environment with strategic initiatives aimed at fostering long-term growth. The company's commitment to innovation, sustainability, and shareholder value, combined with its focus on managing gross margins and EBITDA, positions it to capitalize on global market opportunities despite current headwinds.
Full transcript - None (SMSOF) Q2 2024:
Operator: Good morning, good afternoon and good evening, ladies and gentlemen. Welcome to the Samsonite International 2024 Interim Results Earnings Call. Please note that, this event is being recorded. I would now like to hand the conference over to Mr. William Yue, Senior Director of Investor Relations. Thank you. Please go ahead, sir.
William Yue: Thank you very much, operator. Good evening, good morning, good afternoon and good evening, everyone. We just announced our first time results. And today, we have our CEO, Kyle Gendreau and our CFO, Reza Taleghani with us to present our first half results. And to begin, our CEO, Kyle Gendreau, will make a few opening remarks. Thank you.
Kyle Gendreau: Okay. Thanks, William. I'm starting on page 5 of our investor deck. Thanks, everyone, for joining us. So just to jump right in, we've maintained strong profitability on net sales growth in the first half amidst a more challenging global trading environment, achieved sales of $1.76 billion, delivering growth of 2.8% over an exceptional first half last year, as you remember, into our first half last year it was up 16% to 2019, up dramatically versus the previous year, which was fueled by very strong consumer spending last year, very high travel demand and large wholesale customers rebuilding their inventories was the start of last year as many of you remember. Our gross margin continued to be exceptionally strong in the first half at a record level, 60.2% gross margin, up 140 basis points to last year. Part of that is our disciplined promotional management, but also strong growth in our DTC channels, which were up 4.7% to last year. Relative to our wholesale channels, which were up 1.6% on all that contributing to a higher gross margin for us in the half. We achieved first half adjusted EBITDA of $333 million and a record first half adjusted EBITDA margin of 18.9%. That's up 10 basis points from last year even with 20% -- 20 basis point increase in advertising. And it really underscores our fundamentally enhanced margin profile, our ongoing discipline on expense management and our resilient business model, delivering really great profitability for the app for us. Increased our investment in advertising, as I said, up to 6.6% of net sales from 6.4% last year. We're generating free cash flow. It's up from the year prior, $18 million, so $82 million of free cash flow in the half and continuing to manage our cash flows overall very efficiently, Reza we will cover that in just a bit. As you know, we're pursuing a dual listing. The Board has authorized us to pursue a dual listing in the United States. We expect this dual listing in the US to enhance value creation over time, really by improving liquidity in our shares and making our shares more accessible to shareholders both in the US and globally. And so we continue to progress on that journey. The next page, just to give you a sense of what we're seeing. And so while global travel and tourism trends continue and continue to be, in many places, record levels of travel. Overall, consumer sentiment is softer in the second quarter from what we saw in the first quarter. And despite that, we're pleased to deliver this constant currency sales growth, not just for the half, but even in Q2, we had positive sales growth, definitely, with a more uncertain macroeconomic environment, softening consumer sentiment and moderating consumer traffic contributing to a slower sales trend that we've seen in Q2. Despite the slower trend, our business continued to deliver strong profitability, again, underscoring a lot of the changes that we're able to achieve during pandemic and really speaks to kind of the resilient business model that we have that we're managing very closely and carefully. Global travel and tourism trends have continued to retracted levels. You look at US travel numbers, they're every major kind of travel events, they're at record levels for this year. But consumers have become more selective and intentional with their spending habits. If I think about last year, as travel was recovering, I think consumers were moving more freely with their wallets and moving in a more aggressive way from a travel perspective. They're still traveling, but I think they're definitely more intentional in the way they're spending. And when they're traveling, we're noticing and other companies are noticed as well. Maybe they're not spending at the same levels while they're on their trips as well. But what's clear is the world still traveling at record levels. We've definitely seen premium and luxury realtor sector, showing signs of weakness and softer demand, which is impacting our own Tumi business. We'll cover the brands later in the deck. But our Tumi business for the half was up around 0.3%. And that's a signal of this kind of upper end consumer and really around traffic and software demand at this premium and luxury level. And we're seeing that in our Tumi business, but still delivering positive growth. The mid-section of the market is more resilient. And as you know, our Samsonite brand rides right in the mid-section of this market really an amazing performer there. And this is performing more in line with the travel trends that we're seeing. Our Samsonite business is up just shy of 6.6% growth in that, up 5.8% and really delivering across all regions. I'll show you a slide on that in just a bit. Promotional activity definitely increased in the marketplace. We knew it would competitors came back into inventory, particularly at the entry level of the market, and so we'll cover. But in India, particularly, we're seeing that. And I think importantly, we're responding very tactically, but our priority remains to drive high-quality sales to build a stronger foundation for long-term profitable brand accretive growth. I think we -- you need to think about that when we're managing the entry level of the market. We're being very disciplined on making sure that we maintain the profit profile that's appropriate for this business while driving sales growth, but not following down into levels that we don't want to be. In exchange pressure, you can see that our numbers we talk constant currency exchange rates continue to put back on our reported top-line numbers and profitability, but that's less something we can manage. For the quarter, achieved Q2 net sales growth of 1.5% and against a tremendous number last year, Q2 2023, while navigating pockets of headwinds in 2024. So we're still delivering growth in the quarter. As you recall, we had outsized growth in Q2 of last year. You can see it on the chart to the left of the page, up 36%, really driven by extraordinary demand in post-pandemic travel resurgence, particularly in Asia, particularly in China, which had a tremendous research last year in Q2. Increased sales in North America, it's wholesale customers were filling inventory in ahead of travel season and maybe they were behind leading into that. So we had very high numbers last year from that perspective. And Tumi really had tremendous growth driven by elevated demand for our core products but also supported by arrival of inventory that was, if you recall, was coming in at the end of Q1 and Q2 of last year, and we're comping against that as well, where they were a little bit delayed on inventory compared to the rest of the business. In the quarter, we achieved positive constant currency growth -- despite a shift in the retail landscape. And so we look at softer consumer sentiment among Chinese consumers, significant promotional activity, particularly in our India business. We'll cover that in resi section as well. And just general moderating consumer traffic in North America and increased customer caution, despite all of that, we delivered a positive number for Q2 as well. And just I'm on slide 8. What gets me excited about our business, not just for this year but for future years is the sheer growth in global travel. So I aided, air passenger forecast numbers continue to be very strong. You can see the bottom left of the page, is the global number, across all regions, but globally the travel numbers quite dramatic, up 10% for this year, 8% for the next year. And blended over the next five years from four billion global travelers, we're going to add -- or five billion, we're going to add 1.2 billion travelers in the next five years is the forecast. And for me, this is what gets me very excited about our business and the industry we’re in, and all those trends continue and will continue to be in play for us for next year as well. Brand Samsonite, as I said earlier, which is kind of part of our three core brands, really led the way from a growth perspective. You can see off to the last -- the first half 2022, 2023 and 2024. I start with first half 2023, tremendous growth from the year before, as you'd expect as the world was recovering up 47%. And on top of that, we continue to deliver growth this year, just shy of 6% growth. And first half 2024 Samsonite, up almost 36% to first half 2019 really talks about this kind of fundamental underlying growth in core. So the real -- when I look at Samsonite and the growth that it's achieving, it's really matching what we're seeing in the travel industry as far as the travel growth numbers and this brand riding right along with that. We saw strong growth with Samsonite, both travel and non-travel helping drive those sales, so really excited to see that result. And we saw it across regions, so I’m on page 10. And you can see across regions, Samsonite delivering growth, up 2.6% North America, 6% for Asia, Europe, 6.8%; and 23%, 24% for Latin America. So that core business Samsonite delivering great growth for the half. As I said, Tumi is really a little more pressure, and it's really a bit more pressure in that kind of premium/luxury space. So our business is up 0.3% off of a really tremendous number last year, as I said earlier, around coming back into inventory and people starting to move. We saw growth in Asia of 2.7%; Latin America, 32% as we penetrate Tumi within Latin America, but slightly offset by some slight declines in North America and Europe really affected by moderating consumer traffic in the high sales comparative to last year. The Tumi brand has a strong pipeline of products. We'll see products in the back half of this year. We'll see some exciting new products in the start of next year. And we'll continue to see opportunities for store openings, and we continue to open stores for Tumi as well. And then American Tourist, which is our entry-level business. If I take India, and we'll cover India, taking India route, that business was up 1.5% for the half. Our net sales on a reported basis were down slightly to last year. American Tourister is largely impacted by reduced sales in India, where we've seen dramatic competitive discounting, as well as some decrease sell into some of our North America customers off of a tremendously strong number last year, up 43% for last year. The net sales in India after three very significant double years of double-digit growth and that’s almost 30% to 2019 it was down 9% versus last year and really against increased promotional activities by competitor. And again, as I said earlier, we're very carefully and tactically prioritizing driving quality sales to build and maintain long-term profitability for this business while going to get the right levels of sales it’s wrapped at around getting the right positioning for the brand and not falling down into lower levels of the market that we don't want to participate it, and again, if I take India route, the American Tourister business, up 1.5% in 2024. Reza will cover regions a bit more in his section, but all regions largely delivering growth, Asia up 2%. If I adjust just for India, Asia is up almost 5%. North America largely because of the Tumi numbers about flat. And Europe's up 4.6% and Latin America is up 20%. Reza will cover that more. And we continue in the business to really drive innovation across all of our products. We had a couple of samples here on page 14, Essens Limited, which is a largely recycled bag. I'll come to that in a second, really an amazing story about sustainability and where we are on our journey there. 19 Degree Frame case following off the 19 degree collections within Tumi that are very, very successful adding a frame case, which will do well in many markets around the globe. And then, Dash Pop is a fun, colorful American Tourister brand, as you'd expect, really fun, vibrant in delivering great sales. We have a lot of exciting products launching in the back half of this year. Proxis aluminum of the Proxis collection is launching in the back half. And this is a great collection. There's a real trend in aluminum luggage. And you can see this product fits the bill really quite an amazing product for our Praxis collection. Within -- on page 16, we re-launched, we're calling it Restacked to the STACKD Collection. We're launching Restackd, which is one of our better sellers. It's a modern, minimalist design that's really played well across the globe. This is now made out of lightweight polypropylene, comes with packing tubes. It's very sustainable products as far as kind of interiors of the product, and we're quite excited about this. And this is launching in the back half of this year as well. 19 Degree Frame that covered this well. This is a terrific product doing quite well in pockets of the world. It incorporates recycled polycarbonate, which is exciting for this product and recycled interior linings as well. And then Dash Pop, as we said, this is a vibrant color for exactly what you'd expect for American Tourister really made out of super strong polypropylene lightweight and 100% recycled interior for this product as well. It also allows personalization, which is a big trend in the market so we can -- consumers can personalizes luggage as well. And it's fun. It matches American Tourister perfectly. Just a few points on the marketing side. We continue on our journey to push our businesses. We had great partnerships with the US gymnastic team and the US sailing teams ahead of this year's Olympics, who are sponsoring these teams, and that was all well received and quite an exciting Olympics that we've all just watched. On the Tumi side, we continue to push our global reach and brand awareness. And as you know, we launched Tumi Golf earlier in the year or at the end of last year. And we have some wonderful new ambassadors for Tumi. Nelly Korda and Ludvig Aberg, is part of our team and quite excited. And as we head into some of the end of season Golf, you'll see Tumi showing up in a more meaningful way really allows us to broaden awareness for the brand to new consumers. We're excited about what we're achieving there. And then on the Samsonite backpacks side, just a few campaigns within -- within Europe, we're launching You Are The Journey backpack collection. And we've seen our non-travel growing slightly faster than our travel in the half, both growing really well. But non-travel really has a trend. And so Europe will have a dedicated campaign as we get into the second half of this year going into kind of end of summer, fall season, which will be very exciting and really featuring these amazing collections of backpack and non-travel products for our business. Moving to North America. We have a bringing campaign, and you can see it's a campaign focused on kind of legacy of innovation, which we're known for also embracing kind of the changing landscape of travel. So, we have ultra lightweight process here, lightweight. We have really exciting Outline Pro in the adjacent products, the non-travel products that really quoting well, this product is doing quite well within Europe and other markets of the world. And then Ecodiver, which we've initially had launched in Europe, now launched in North America this year, performing really well and really a kind of more unstructured travel -- way of travel that lots of consumers are shifting to today. And this is off to a great start and we'll be putting campaigns behind all this as we head into the fall of this year as well. On the sustainability side, we continue to make great progress. We fine-tuned our vision statement and to more clearly articulate our commitment on sustainability. If I could, I'll just read these two points, corporate purpose; to empower a lifetime of journeys that move the world forward. We take this very seriously within our organization across all of our brands. And on our sustainability vision and you've heard me say this, but it's just a very clear statement is our leadership position to create a path towards a more sustainable future for our industry. And that's what you should expect from us. That's exactly what we're working on against our four pillars; planet, product, people, and governance, we continue to make tremendous strides. And if I look at the product pillar, we're really moving in a really positive way. We've been very focused on our product sustainability framework helping us to define where we are going and what we can do to increase the use of recycled content in our products. On this second half -- second half highlight, we've launched Essens Limited Edition. This is a suitcase which is effectively helping close the loop. This is a suitcase where the [indiscernible] is using post-consumer waste for the outer shells. Here, we've incorporated recycled luggage. So, we're working with our recyclers and recycling luggage into this product. We've increased the amount -- the weight of the product with recycled material up to 70%. The previous version was 50%. But importantly, closing the loop as we test the waters and how we cycle old luggage back into luggage. This is a terrific example of what we're able to do when we focus on it. More to come, and in Essens, is off to a good start. On the planet pillar, we're very focused on setting our near-term science-based target. We'll publish this later in the year. We're doing the work now and this is really around how do we move the needle on our carbon emissions on our planet pillar, and we're quite excited to set this target, which will be coming out soon in the back half of the year. Just a picture within Tumi, we've expanded our Tumi distribution center in Vidalia, Georgia, and we're putting a solar array there. By the time we're done with this, almost 80% of our electric needs in that one facility be covered just on our own solar capabilities on the property. So, excited, they're excited for the teams. And on the people side, we continue to make great strides. We're focused on really elevating the employee experience throughout their journey and also on strengthening social compliance, human rights, diligent efforts, all the things that we've been doing continue to push. And importantly, we ran our second Global Culture & Inclusion Survey and over 80% of our employees agree very strongly that they're proud to work for an organization that is committed to sustainability. Importantly, and you heard me say that sustainability works when your entire organization is find it, and that's what we have here as we move forward on our responsible journey. So, with that, I'll turn it to Reza, then I'll come back at the end for some closing comments.
Reza Taleghani: Thanks so much, Kyle. And we are on Slide 27. Just to recap the first half results. Constant currency growth of 2.8% year-over-year first half of 2024 compared to first half of 2023, delivering a $1.79 billion of sales. If you're looking at it broken out quarterly, Q1 sales growth was up 4.1%. Q2 tempered slightly to that, so up 1.5% on the quarter. The good news is on gross margin, we are continuing to maintain discipline on gross margin and for the half, 60.2%. Q2 was very similar to Q1 and coming in at 60% gross margin. Overall adjusted EBITDA, a record number, record first half adjusted EBITDA margin of 18.9%, delivering $333 million, which is down about $800,000 year-over-year, but on a margin percentage of record. And that's even with an increase in advertising spend of 20 basis points as well. And overall net income, up $3.1 million on the half compared to last year, delivering $174 million of net income as compared to last year. On Slide 28, we'll go through the revenue environment by all of the regions. Kyle touched on this briefly, but let me -- I'm going to double-click a little bit on some of these. So starting with Asia. So overall, constant currency growth on the half of 2% year-over-year, North America roughly flat, but there is a differentiation between the Tumi brand and compared to the other brands, which we'll get into. Europe showing healthy numbers of 4.6% growth still year-over-year and Latin America continuing to perform with a very good 20.3% year-over-year revenue growth number. On Slide 29, we wanted to spend a little bit of time just delving in a little bit as to what we're seeing -- where we're seeing pockets of pressure. And we've isolated for China and India, specifically, which are 2 of the key markets, the 2 of the largest markets we have in Asia. There is a more challenging retail environment that we're seeing in both China and India and there's different issues for each of them, which we wanted to cover with you. China net sales for the half was still a healthy number, up 7.6%. But if you're looking at the trend, Q1 was up 23%, Q2 down 3.5%. So looking at it month by month, you're starting to see on any given month, we can be in positive territory, slightly negative territory. So the long and sure of it is we're seeing a weakening consumer sentiment out of China as many consumer companies are as well. We're continuing to monitor that Chinese market. We're seeing absolute travelers still moving. But what's happening is in terms of the actual purchasing, we're seeing a little bit of a tempered purchasing environment when those consumers are moving around. And again, sales in China did double from first half 2022 to first half 2023. So these numbers are obviously off of a very favorable comp in 2023, but we are seeing that sort of pressure in the Chinese market. India is largely a function of having 2 large competitors in the market, both VIP and Safari. Off of 3 years of significant double-digit growth, we were up over 60% compared to first half 2019. This half, we are down 10.6% versus last year. And the primary reason for that is those competitors, there's a lot of promotional activity that we're seeing in the market. We are carefully managing our margin in the market. So we're choosing not to have the same level of promotion and trying to maintain that gross margin discipline, and that's resulted in a decrease in sales. So year-over-year, we're looking at overall for the half minus 10.6%. But if you're looking at Q1, it was down around 10% and Q2 was down around 11.3% year-over-year in the India market. Looking at North America, we're also seeing some moderating retail traffic in the North America business. So we thought it would be helpful just to break it out by showing the Tumi business versus the business excluding Tumi and the Samsonite, American Tourister and the other brands. North America Tumi for the half compared to last year is down slightly, so down 1.5%. Now that's off of a period where the Tumi came in the stock, and there was a very favorable comp as people were finally traveling again and buying the Tumi product. But if you're looking at it broken out by quarter, quarter one was up slightly at 0.4%. Q2 down 3.1% to the prior year, and this was largely driven by slower traffic. So as we look at the stores, the footfall is definitely lower this year as compared to last year. North America, excluding Tumi, largely flat, up 20 basis points year-over-year. And the trend is pretty much the same between the quarter. So Q1 was up about 30 basis points. Q2 was up about 10 basis points. But still at that medium tier, there's still strong consumer spending that's happening and there's good travel demand at that Samsonite, American Tourister level in the U.S. Moving to Slide 31, just a few points in terms of where we're continuing to invest in the business to set the foundation for future growth, continuing to invest in advertising. So advertising spend in the first half was $117 million, which is 6.6% of net sales. That's $3 million higher than what we had last year, and we continue to invest heavily to try to drive brand awareness and to drive traffic to our e-commerce sites. Fixed SG&A did increase $17 million to $426 million from first half of 2024, compared to first half 2023. But if you're looking at it on a quarter-by-quarter basis, it's actually decreasing compared to the $428 million that we had in the second half of last year, and that is despite adding 31 net new stores. So as we talked about on the last earnings call, we are continuing to lay some limited number of new stores to basically provide a foundation for future DTC sales growth, and we are absorbing that cost and continuing to maintain discipline around overall fixed SG&A. As Kyle mentioned, we delivered positive free cash flow of $82 million, which is an $18 million improvement year-over-year. And on the next page, Page 32, net debt of just over $1 billion as of June, and that's compared to $1.337 billion as of June of last year. So continued focus on delevering the balance sheet. Net leverage as of the end of June was 1.39 times, the lowest level since the acquisition of Tumi, ample liquidity in the business. We have nearly $1.6 billion of liquidity, which really hasn't changed over the past few quarters. That includes $744 million available on our revolving credit facility at the end of June. We did announce the share buyback program in June of 2024 up to $200 million, and we plan on initiating share buybacks after the blackout period ends later today. We have also reinstated our annual cash distribution. So that was paid out in July, $150 million of distribution was paid out as we focus on making sure that we return cash to shareholders. Moving on to the next slide. Net sales contribution of DTC continues to increase with very healthy e-commerce growth. We had 10% e-commerce growth and overall DTC growth of 4.7%. The DTC total has grown to 38.1% in the half as a percentage of revenue as compared to 37.7%. So a very healthy mix, and that helps also improve our gross margin as the DTC channel to have a higher gross margin profile. On the next slide, just to get into the details of travel versus non-travel, similar trends. Our non-travel growth was up 5.3% on a constant currency basis. And that means that as a percent of 34.4% of our net sales are now coming from non-travel, up from 33.9%. Again that also has a gross margin benefit to our business as well. Moving to Slide 35. Obviously, our profitability remained pretty strong overall. The business model remains resilient. We've maintained a lot of discipline around gross margin in every region. The sales mix is also helping in that regard as well. We have continued to invest in the business by increasing advertising spend. So as I mentioned, $117 million of advertising spend in the half. Very tight controls around fixed SG&A. We've kept it flat in the past year, and were around $213 million of fixed SG&A. And that resulted in a first half adjusted EBITDA of $333 million, very healthy EBITDA margin of 18.9%, up 10 basis points compared to last year even after the increase in advertise. And just so you have it broken out just so you can see the trend a little bit. We decided to show it by quarter. As you can see, that fixed -- the absolute dollar amount of fixed SG&A has remained fairly constant in the past three quarters to four quarters. And that's after significant investment in new stores of 31 net new stores that have been added to the fleet as well. On the next slide, on the balance sheet, very healthy balance sheet position. We continue to delever. You can see the trend of the net leverage ratio on the bottom of the page. Going from Q2 of 2022, we were almost four turns of net leverage. We've whittled that down to below 1.4 turns in this quarter. So very happy with the progress on the balance sheet. We continue to be very disciplined in terms of CapEx and other spending and continuing to manage working capital as well, as you can see on the next slide. In terms of working capital, always a focus for us on slide 38. You can see that inventories, we have reduced inventories year-over-year of over $100 million. We are also not purchasing as much inventory as last year, so you do see that accounts payable number down about $75 million as well. So we're being very disciplined as we try to manage the inventory levels as we monitor the sales environment for the back half of the year. That results in working capital efficiency of 14.6% in the quarter, an improvement from the 16.2% that we had last quarter. And looking at CapEx on slide 39, we had $41.2 million of CapEx in the first half of this year, which is an increase compared to last year. The $20 million of it, so the majority of that has been retail CapEx that is going into stores. We have 31 net new stores, 19 of them were Samsonite, 12 of them were Tumi. And out of that $12 million was for store remodels and the remainder at what $8 million went into the new store builds that we had. We continue to invest in product and development, $6 million spent in the first half of the year, and we continue to look at making sure that our footprint is able to provide for the sales growth that we're anticipating for future years. And to that end, we have $5 million towards an expansion of renovation of our Tumi North America distribution center as well. With that, I'll turn it over to Kyle to talk about outlook, and then we'll open it up for questions.
Kyle Gendreau: Okay. Thanks, Reza. Okay. Just looking ahead, while growth in travel -- global travel and tourism and expect to remain healthy throughout 2024. And as I covered on an earlier slide, really for the next several years, we're seeing definitely a more uncertain macroeconomic environment with softening consumer sentiment in key markets primarily North America and Asia, but I would generally say softer sentiments globally. We continue to see softer sales trends as we head into the second half of the year, similar to what you saw from our Q1 to Q2. And our priority, I think the key takeaway for me and our teams is our priority remains to drive high-quality sales and really focus on building a stronger foundation for long-term profitable brand accretive growth. And I think when you look at our numbers here and you look at how we're managing and navigated on behalf in Q2, all delivering exactly on that. For spend in advertising. We're targeting around 7%. We're at 6.6% for the half of the year-to-date. And we really see advertising as a way to drive future net sales growth for all of our brands, not just at the moment, but setting ourselves up for growth in the coming years as well. And we're very focused on ensuring we deliver and manage that advertising effectively. We continue to focus on driving profitable sales through our higher-margin brands. So, you can see brand Samsonite and to moving at different paces. We're focused on the channels. You can see our D2C mix continues to grow. Overall, D2C was up 4.7%, our direct-to-consumer e-commerce is up 10% for the half and really driving on the channels and the brands that move our margins forward and regions that move our margin for it. And it's really -- you can see it in our gross margin numbers, not just for the half, but on a go-forward basis, I still see opportunities for us to manage that really well. Our business generates very strong cash flow. It always has, and it's really led by this asset-light business model. So we're spending more on CapEx, but our CapEx numbers are relatively small when you think about the size of our business. And we can get the balance of our capital allocation strategy, right, on the balance sheet, investing in organic growth and returning cash to shareholders, not just with dividend, but starting to look at share buyback as well. I mean all of that we're managing against the business that has a really strong history and current trend on generating meaningful cash flow. The company continues to make great progress in our responsible journey. I covered that quite well. I'm quite excited about the next steps for us. I'm quite excited about setting our science-based targets, really to reduce emissions for not just our own operations but across our supply chain and our whole teams, as I said, are really engaged behind this and more to come as we move this journey forward on our responsible journey. As I said at the beginning, the Board has authorized stuff to pursue a dual listing. We're clear that we're focused on the US. I mea, I do think this creates shareholder value as we move forward, improving liquidity for our peers, which has been a bit of a problem for us for a period of time. And really importantly, related to that, making our shares more accessible to shareholders in the US and globally. And so we're making great progress on that work stream. And then as Reza just said, we announced a share buyback program. We'll start that off the back of us finishing our half year results, and I think that will be supportive for our shares as well. And so with that, William, we'd be happy to open it up to some questions.
William Yue: Great. Thank you, Kyle. Thank you, Reza. Operator, why don't we start the Q&A session? Thank you very much.
Operator: Thank you, William. [Operator Instructions] And our first question comes from Carlton Lai with Daiwa. Please go ahead. Thank you.
Carlton Lai: Hi, guys. Hi Kyle, Reza and William. Thanks for taking my question. So I'll kick it off with the first question on gross margins. I'm very happy to see continued record gross margins first half, and I appreciate that we've been very disciplined with the promotional strategies in the past. But as we're seeing much more promotional activity in the second half and also just overall weaker macro environment, I mean, what are the trends there in terms of are we going to give into potentially more promotions? And then from a gross margin perspective, do we still have room for that to increase given that we're trying to increase our DTC mix change. I'll start with that.
Kyle Gendreau: Yeah. I think, I can answer both those and Reza pipeline -- but we're not promoting and discounting, right? The market moves. We knew as we were coming out of last year and as competitors come back into inventory, we'll need to manage that. And so we are doing that, and I think the key for that is the discipline level, maybe the period of time that we're on sale of the levels that we're discounting. So we're following, and I said it earlier, tactically executing here to make sure that we're delivering the balance right of driving sales, promoting and discounting, but not getting sucked in, particularly at the entry level, not getting stuck down to a zone where your margin profile changes, but your overall profitability is impacted and it's quite hard to work your way out of that when you get there. So it's not that we're not in the game, we definitely are, but we have much more discipline in the way we do that than maybe where we were pre-pandemic where we'd allow more flexibility. And I think importantly, that's kind of built into all of our regional team leads and brand leads as far as the discipline that we deliver the right sales levels for the business. The power we have is we can refresh our product and we can hit price positioning. And so I can be competitive, we can be as a company competitive across our brands, particularly the entry-level brand, American Tourister brands or products like Dashpop, that can be engineered to hit positioning, allow us to have promotion and discount, but deliver the margins that you're seeing from us. And because of our scale, we can be moving quickly to do that and hit positioning. Consumers are generally -- we're seeing a general trade down in consumers as far as what they're spending. But for us, it's not like I have to discount product X to get to that. I can have product X, I can turn promotion there, but I can deliver the next product that delivers on where maybe the pricing is in the marketplace and still deliver the gross margin. So that's part of one of our scale advantages as far as being able to manage that. And I think you're seeing in our gross margin consistently now for three or four quarters really doing quite well. As far as the second question was around kind of mix and long-term effects, Mike, when you look at our D2C mix, and it's not that it's going to change dramatically, but every year you should expect our D2C mix to continue to improve as D2C e-commerce is moving. There are retail opportunities. The brand Tumi has long-term opportunities to really grow meaningfully from where it is today. All of that will have a pull effect on gross margin as well. And so as Asia moves at a faster clip than the rest, that will pull margins up as D2C moves at a faster clip. And ultimately it's Tumi. It might feel like it's not at the same kind of levels that what would be normal for Tumi, but the reality is Tumi medium and long-term has the ability to pull this whole thing up as well. So I do expect the mix effects allow us to have upside potential. It's not going to change dramatically, but there'll be upside opportunities on the gross margin side for our business as you look at it. And as you guys do your own modeling, I'm sure you see that. We can see it when we do our modeling as well.
Carlton Lai: Okay. I appreciate that. And my second question is, I just want to come back to one of your pages in your deck where you highlight kind of the two pressure areas that we're seeing, specifically China and India. And it does look like I think some of the industry trends that we're seeing, China being poor sentiment and India very promotional. These two does seem like, or at least if we assume that these two trends continue for the foreseeable future, say in the next one or two years, what are some of the things that we're doing to kind of counter those effects and so that we don't just wait for the market to turn?
Kyle Gendreau: Yeah. We're definitely not waiting. I love Reza's answer, but we're not -- we're doing all of the right things, but Reza can cover that.
Reza Taleghani: Yeah. So think about the product positioning of the different brands in China. Let's start with China because historically, China would have been one of our biggest market in Asia. There's a lot of lessons that we've learned out of what's happened in India that are applicable to China, and we just had a deep dive meeting with the China team actually a few weeks ago. If you're looking at the China market, what we're seeing in terms of consumer demand is the premium, the luxury categories are being disproportionately affected right now. Now we have been largely shielded to that because travel overall and travel demand has been very strong. So we're not just luxury when we talk about its performance luxury and it's actually there's functionality that comes with the product. So people are still acquiring the product. That does continue and keep in mind, Tumi in China is largely non-travel right now. So that mix is something that we're working on. So if you're thinking of the strategic pillars of our Chinese business, we're looking at it and saying, at the middle tier, so American Tourister, for instance, American Tourister has enjoyed remarkable success in India. Are there learnings from that? And can we apply the same strategy for that to target that mid-tier customer in China, if consumer demand remains under pressure for the next year or two in that Chinese market, so expanding at that price point. In terms of the price positioning of Samsonite, if you look at Samsonite price positioning in the Chinese market compared to Tumi, the two are actually very close. So we're looking at the price positioning of the Samsonite brand as well. We're also looking at -- and it's not to say that we don't see growth opportunities for Tumi, we do. And one of the things that is actually a benefit of what's happening in the overall consumer market in China right now is a lot of real estate locations, which previously would not have been available are actually available. So we're looking at it strategically and say this is a chance for us to make sure that we're in the right locations for Tumi, with the right square footage of stores and trying to make sure that we penetrate the customer at that level as well. So that would be the China market.
Kyle Gendreau: Mike just add, my personal view on China is over the next five, six years, there's no reason why we don't double our China business. So we're looking -- we have some headwinds today, the consumers are acting differently, but the sheer underlying opportunity for China, particularly at the American Tourister level, or the Tumi level are tremendous. And so that's the way we're thinking when we're working with our China team is around how do we double the business from where we are today. And so we're just navigating some of these, I would call shorter-term headwinds, but the long-term dynamics are trying a tremendous for us.
Reza Taleghani: Yes. And if you look at our market position overall in terms of market share, we have a lot of room to grow in the Chinese market. So we definitely look at China, as a medium-term growth pillar for our business, not only for Asia but overall. As it relates to India, it's a different set of issues. So there is a different cadence and different – the activity that's happening in the competitive environment. And we've always said, India is one of the few markets globally where you have a strong number two player as well. And in this case, it's number two and number three that's emerging as well. Our strategy in India is to make sure that we stay the course. So number one, we want to make sure that we don't give up in terms of having promotional activity that can deteriorate from the brand. So we want to maintain brand positioning. We want to make sure that the brands remain aspirational to a certain degree, although, American Tourister is the largest part of our business in India. And then at the higher end, so if you're looking at Samsonite and to a lesser extent, Tumi, we've talked about on previous earnings calls that we've had a very focused approach in terms of investing behind the Samsonite brand because Samsonite itself is very underpenetrated in that market. So I think the combination of those two should help us right the ship in terms of and continue to have the growth in terms of India. And keep in mind, in India, we are a local, local player. So we actually have a factory in India, so we don't have to suffer from import duties and other things. So we are able to compete head-to-head with these competitors in there. And we're not overly concerned in terms of the medium-term sales environment in India. We look at this as a period that we're going to navigate through and we should be fine going into the future.
Kyle Gendreau: Business is up like 60-plus percent to 19. It's been tremendous growth, and it's got tons of opportunity going forward. We're just very disciplined and carefully managing so that we don't unwind this great profitability that we have there as well. And I think we can get the balance of both of those right.
Carlton Lai: Right. And just last question before I jump back in the queue, is that can we just hear your thoughts on 2025 growth expectations broken out by perhaps the markets?
Kyle Gendreau: I think we're evaluating my sense is for next year. We'll be obviously comping some of the mid part of this year. So I don't have a firm view on this, but I would say that we should be back to mid upper single-digit growth for next year. The wildcard, and like lots of companies, I don't think anybody's ready to commit to it yet. Just what's the consumer sentiment, what happens with consumer confidence. What's clear to me is travel will still be resilient. And I think what makes us excited and a bit resilient is the travel dynamics, I think, will continue to be strong. I think you'll get more recovery from Asian travel next year. You're seeing some of it this year, but outbound China travel is still muted. I think that will improve next year. For me, I'm hopeful we get back to a normal cadence of what you'd expect from us a kind of mid-upper single-digit growth for us. But I think I'd probably want to see what the next three or four months are before I commit to kind of what that trend would be. But we're operating that way. We're operating a lot of times where you're sitting today, you're operating for what you're going to do next year, and we're already starting to think through making sure that we're in the right position to deliver that. So I know that's a bit more of a wishy answer for me, but I think it's because there's enough uncertainty in the marketplace that we're just trying to navigate and get a good handle on it.
Carlton Lai: Understood. Okay. Great thoughts. Thanks, guys. I'll jump back into the queue.
Operator: Thank you.
Kyle Gendreau: Thank you
Operator: Thank you. And our next question comes from Chris Gao with CLSA. Chris, go ahead. Thank you.
Q – Chris Gao: Thank you. Thanks management for taking my questions. I have three. So the first one is related to your year guidance. I remember last time, in the first quarter's result, I mentioned about some high single-digit percent constant currency Y-o-Y revenue growth this year. So we're wondering if there's any change on this guidance? And then maybe if there's any more detailed guidance of growth by brand and by region. So this is my first question. And my second question is related to the competitive landscape. So currently, we're still glad to see that your GP margins continue to improve, thanks to the B2C channel strength. And currently, because we have observed the discount environment has becoming more and more intense, right? So looking forward, how would you comment to a possible discount level by brand, especially for Samsonite, American Tourister, do you expect the discount level to remain stable Y-o-Y Q-o-Q? Or do you see higher possibility for more discounts in the future? And the last thing is about your D2C channel. So just wondering how much of your B2C growth is coming from like high-quality new openings and how much is from single store sales because single store sales trends showed very diverse trends across different regions. So this is the third question about the breakdown of B2C growth. Thank you
Kyle Gendreau: I'll handle guidance from we're sitting today, I think the full year, if you look at where we are year-to-date, we're up 2.8%, we're definitely seeing more pressure as we exit Q2 into Q3. So I think Q3 will be a bit lower than what we're seeing in Q2. And I think that is the general landscape retail landscape that we're seeing for kind of everybody in the consumer goods space. So we're seeing some of that. I think we'll be slightly negative for Q3 from a growth perspective. But our full year expectation is I think we'll do a positive number, I think it can be kind of 1% to 2% growth. But I would tell you there's enough uncertainty in the marketplace that could be a little bit lower than that. But from where we're sitting today and we're also comping a softer Q4 last year. I think we'll get the benefits of that as well from a blended perspective. That's kind of my outlook. Things changed quite dramatically from Q1 into Q2, and we're not alone. I think lots of consumer goods companies really saw some fundamental shifts in consumer sentiment into the second quarter and particularly into the end of the second quarter, which is what we're watching. So from a guidance perspective, that's kind of where I'm at. I think we'll be positive. But I would say low single-digit positive is where I'm sitting today. As far as competitive landscape, the competitive landscape was kind of changing at the end of last year, we knew coming into this year. Our kind of promotion and discount guidance, we're kind of executing it today. So it's not like it's going to change dramatically from the first half into the second half. We're managing that really well. Our teams are managing that really well. As I covered on the first question, we're also reacting and we're developing an engineering product to hit positionings that are appropriate for markets, particularly for brand Samsonite and American Tourister, Tumi's less affected by that, though we have lots of new products coming for Tumi. But within Samsonite and American Tourister with development, we can hit positioning that allows us to be super competitive against the competitive base that can't move at the same pace that we can as far as product development and positioning. And on the DTC side, these numbers are very strong. When you look at the overall, our comps blended across the globe were slightly down. I think it was on page -- one of the pages on our -- page 33 of our decks. So down 1.4% comp when you think about uncertainty in the marketplace that's a piece of it. And new stores that we've been opening are very successful and continue to be successful as we open new stores. They're moving. And our DTC e-commerce, which is in our direct-to-consumer business, up 10%. That's a good signal for where consumers are, what they're doing, and we continue to prioritize and push and invest behind all three of these funds as far as kind of comp, new store development and our e-com business, all blend to a DTC mix that I think over time continues to creep up as we've kind of indicated in the past. I don't know if you want to add any...
Reza Taleghani: Yes. Just two points to add. Just on your second question, as you were asking about discounts, I just want to pick up on a point Kyle made a little bit earlier. So if you're looking at discount and its correlation to what happens to our gross margin, again, don't forget that we can build products to hit certain price points that still hit our gross margin target. So if you're looking to next year, we can still manage our gross margin in that regard. Now, there's other pressures, shipping costs, break costs, things like that can play into it as well. But it's not just promotional activity that would necessarily bring the gross margin down, because we can still hit a price point for a carry-on bag, for instance, in engineering hit that price point by adding a removing functionality as we see fit. So that's one thing that I would highlight. And then just on the DTC question that you have. So 82 net new stores year-over-year, so -- and that's, by the way, so when you think about our fixed SG&A, realized we've added 82 stores and absorbed that. So it's a pretty healthy number. 31 stores added year-to-date. So 82 over a year and 31 just since the beginning of this year. And as Kyle mentioned, our comps were down 1.4% during that period of time, and we still have very healthy e-commerce growth and overall DTC growth. So I think those are pretty good numbers overall.
Kyle Gendreau: Considering the environment...
Reza Taleghani: Considering the environment that we're in, yes.
Q – Chris Gao: Thank you. This is very helpful. So I have one follow-up question. For the third quarter, if it is slightly negative, which brand and which region could be the key dragger? And for the full year, if the full-year constant currency revenue growth will be in the low single-digit positive territory, do you still expect positive operating leverage at the adjusted EBITDA margin level? Any comments on this front? Thank you.
Reza Taleghani: Yeah, well, I think we've kind of indicated -- I think Tumi is feeling a little bit of pressure at that upper slice as premium/luxury foot traffic is down. So, I think we're seeing some pressure there. I think the same things we were talking about earlier with China and India -- those will be a factor within Q2. I think, generally, sentiment is soft, but Europe continues to perform well. Our North America business continues to perform well. Latin America continues to perform well. Asia, because of the impact of China and India, may be a bit lower. So, I think those are the kind of mix factors for that. And as far as leverage, from where I'm sitting today with our outlook, we still think we're going to be roughly in the 19% EBITDA margin range. So, that is a good delivery. That's just kind of record-level EBITDA margins. And so, despite some of the pressures, I think we'll be staying in that ZIP code.
Kyle Gendreau: And that's after increasing advertising spend as well.
Reza Taleghani: Yeah.
Kyle Gendreau: Yeah.
Q – Chris Gao: Okay, perfect.
Kyle Gendreau: We're managing -- we're managing really well.
Q – Chris Gao: Thank you.
Operator: Thank you. Our next question comes from Anne Ling with Jefferies. Please go ahead. Thank you.
Anne Ling: Hey. Hi, Management team. I have a couple of questions here. First, regarding the wholesale business, we still have a good portion of the business in wholesale. So, I wonder, based on your knowledge, is there any channel inventory issue maybe in the U.S.? Or are you seeing your operators -- your distributors discounting a bit more than you had wanted? So, the first question is about the operating environment in terms of your distributor and channel inventory. Secondly, on the balance sheet side, you've done a very good job of bringing down the debt. Now, the net debt level is below that of the period when we acquired Tumi. So, what is our ultimate net debt ratio target? And if we continue to generate decent cash flow, would we consider a higher dividend payout ratio moving forward? Thank you.
Kyle Gendreau: Thanks for those questions. Let me first start with the wholesale channel. Overall -- and again, keep in mind our category, generally speaking, luggage and bags are bulky. So, when you think about the wholesale channel…
Anne Ling: Yeah.
Kyle Gendreau: …oftentimes, we're the stocker for the channel. So, it's not like you have giant warehouses at a mom-and-pop retailer in Europe or if you're looking at Big Box (NYSE:BOX) retailers in the U.S. We're usually -- there's only so much infill that can happen in that channel. Overall, the channel is still performing. When you're asking about discounting, I always caution -- you may walk into a store and see a bag 50% off. Oftentimes, that bag has been designed to hit a gross margin with that 50% discount. And that's really -- especially if you're thinking about the U.S. wholesale environment. If you walk into a Big Box retailer in the U.S., the U.S. market is used to discounting, and those products are designed to hit that gross margin target with that discount. Overall, generally speaking, the wholesale channel remains pretty healthy. We continue to monitor the sell-in, obviously, as we're looking at it. And as you can tell from our inventory levels, we're managing the product purchases in such a way to make sure that we can also make sure that we can fulfill to the extent that they're not adequately stocked going into the holiday season as well.
Kyle Gendreau: I think the one thing I'd add for North America is because consumer sentiment is a bit softer, I think our wholesale customers are not on for our category, our category, the sell-through is happening. People are still moving. But overall, we're feeling some of the pressures that some of these wholesale customers would have on overall inventory levels. With that, I think we're going to have a very good back half in North America with our wholesale customers. But it's a little different than what it was last year when they were filling in. So when you look at our wholesale growth this year, which is up 1.6% for the half, that's a great number against a comp of last year where they were really re-inventorying themselves. And so I'm quite happy with the level of delivery. But it's -- it's starting to normalize back to the normal wholesale pressures of just managing overall inventory levels as they go to the back half. And they're watching consumer sentiment is a little softer. So they're just -- they're a little bit more guarded, but we're still seeing good numbers for our business with them.
Reza Taleghani: As it relates to the balance sheet, obviously, you're starting to see us returning more cash to shareholders. So we reinstated the distribution to shareholders that was paid after the half was done. So $150 million of distribution was paid out in July. We are announcing and you'd have seen that we're going to be doing a share repurchase for the first time. And so that's a meaningful indication to you that as we continue to delever, we plan on returning capital to shareholders as well. That should also be an indication of how strongly we feel about the strength of the balance sheet. We feel like we have adequate liquidity. We feel very good about where we are. And we feel that we can continue to fund the business in terms of CapEx, continue to distribute cash to shareholders and delever. And so it will be a balance between all of those as we go into next year.
Anne Ling: Great. Thank you very much.
Operator: Thank you. And final question today comes from Dustin Wei of Morgan Stanley (NYSE:MS). Please go ahead. Thank you.
Dustin Wei: Thanks for taking my questions. First question related to margin. I think the second quarter, regarding the sort of sales weakness but still deliver like close to 19% EBITDA margin. That's tremendous. So wondering what's the sustainability for such a high margin in the software environment, especially like third quarter can potentially to see some of the constant currencies of decline. I noticed that the North America in the first half, EBITDA margin up to 20%, and that was up from like 16% last year. So what kind of sustainability that we can see here and how to avoid the operating deleverage? So that's the first question. The second question in terms of how to cope with this sort of larger shorter-term headwind. So on the A&P side, like before COVID, company used to have like 5% to 6% A&P and that's a variable kind of number. So I would think in the current software environment, the company would like to reduce A&P like back down to that kind of range instead of like stick to that 7%, especially considering the first half, the company actually under spent 7%. So it seems to suggest that the A&P ratio could go above 7% in the second half, which the retail environment could be further soft. So what's the thought on it? And I think I also heard about you'd like to open more Tumi stores into the second half. Again, under this kind of softer environment, do you have a plan to adjust the pace to position for longer-term growth, but you maybe can delay that a little bit? So second question is related to how to cope with that environment better. And the third is related to you put an announcement regarding the dual listing regarding the $200 million buyback is going to -- sounds like, it's going to happen from tomorrow onward. So in addition to those comments, do you have anything to add? For instance, for the buyback plan, what kind of time frame we are looking for? Is it potential to top up more than like $200 million? Any more comments that you can share? Thank you so much.
Reza Taleghani: Dustin, thank you as always for all your questions. Let me start with margin and then Kyle will take A&P, and then we'll talk about the dual-listing together. So, as it relates to margin, look, there's going to be variability as it relates to quarter margins. But you just heard us say that if we're looking at the guidance for the end of the year, we're expecting to be around that 19% EBITDA margin. There's a couple of components to that, that I'll just draw your attention to. The first thing is we've talked about gross margin a lot. We are definitely running ahead of all of our plans as it relates to gross margin, both Q1 and Q2. When you're seeing north of 60%, that's ahead of what we had always guided to all of you. So at some stage, you would think that there could be some pressure on the gross margin overall. However, that's offset by the fact that if you really look at what's driving the gross margin right now, we're giving gross margin at north of 60% in an environment where our highest margin brand is actually down, and our highest margin region in Asia is not performing to the levels that we thought as well. So the offset to gross margin is going to be that, yes, there could be overall pressure and it returns back to kind of a little bit more historical levels, although we're not going back to kind of mid-55 or anything like that. You do have the positive trajectory of our higher-margin region, our higher-margin brands performing as we go into next year as well. So that helps offset some of that. So that's on the gross margin side. As it relates to EBITDA margin, we keep talking about -- we reset this business to make sure that we have operating margin and a significant improvement in our distribution expense going forward. So that -- the reason we always consistently highlight our fixed SG&A is to just show to you that we are very, very focused on maintaining the benefits that were hard fought to get to this during COVID. And so for us to be able to open year-over-year, when you're opening up this number of stores and still the absolute number of your fixed SG&A is basically the same each quarter. That's quite an achievement that we're proud of. And so that's one of the main benefits that's driving that EBITDA margin is a completely reset cost structure of this company. And then A&P, and I'll let -- well, let me just start and then kind of Kyle chime in. But as it relates to A&P, look AMP (OTC:AMLTF) is an investment. You're absolutely right that you can dial it back and you can take it back to -- everybody knows our brands. We have the leading brands in the market. So in any given quarter, you could dial it back if you needed to. What we don't want to do is to be in an environment where we're not taking advantage of investing behind our brands, be it with A&P and marketing spend, be it in terms of putting in the right level of store network, because we need to have the building blocks ready for next year and beyond, because we're on a journey to continue to outpace industry growth, and we don't want to miss a beat doing that just because there could be some headwinds in a given quarter. So we need to manage the business for the medium-term, and make sure that we're doing that. I don't know if there's more you want to add.
Kyle Gendreau: I think advertising, as I said, were approximately 7%. We'll be on the lower side of approximately 7%. So I think first half was 6.6%. I think for the full year, we'll be in that code to be clear, which is us just carefully managing. So as you'd expect, we've been managing advertising. But to Reza’s point, we're not going to throttle back. This business is navigating through some of these consumer headwinds just fine. And for me, it's around how do we make sure we're setting up our brands for next year and the year after. And you shouldn't put it pass us to increase the number next year from an advertising perspective. And our brands are known, but there's real opportunities to push to me globally. We should be leaning in and doing that. There are opportunities in select markets in the world as we can be doing more. We have some brands that we don't talk about a lot that have opportunities as well Gregory and Lipault I think we're managing carefully this year, but next year, don't be surprised to proposing those today. So blended is advertising, as rightly said, it's an investment tool for us. And we're managing it carefully this year. We're managing where we put us this year. We're managing it very carefully, probably coming just a little lower than what the 7% mark. But we're still 100% fine pushing the brands as I discussed. You also had a retail question which...
Dustin Wei: The pace of the store...
Kyle Gendreau: The pace of store opening. We have a very disciplined pace, right? So we're managing that very carefully, but we're -- I don't see us throttling down what our expectations were because we're managing that in a disciplined way. And in many ways, we're seeing -- particularly in Azure, we're seeing retail opportunities or there will be retail opportunities open up as some of the luxury players have impacts in markets like China, I think there'll be opportunities for us to get some really amazing locations for Tumi. And Tumi is on a journey of doubling itself in Asia, and so we should take advantage of those opportunities. But the pace isn't crazy anyways. It's a very managed pace. For this size business, the number of stores we have, the pace, I think, will continue, which is very disciplined in delivering good results as we open stores.
Reza Taleghani: And then on your last question, Dustin, on the dual listing, we can't say more than has already been stated by Kyle, we're pursuing at the dual listing. The venue is going to be the United States. And so we're on that journey. There isn't really much more to add beyond those remarks. But in terms of the other strategic initiatives, it is meaningful, and you rightfully raised it that we have announced the share buyback. We're serious about it. $200 million is the number that we've said right now. You have to manage the leverage levels. We want to be comfortable that we can return cash to shareholders while investing in the business as well. So it's all around striking a balance between the use of cash that we generate in this business. And so, we felt that doing 200 between now and probably by the end of the year, we'll do the $200 million, that's the right level. And then we can reassess.
Dustin Wei: Got it. That's all very helpful. Thank you, very much.
Reza Taleghani: Thanks, Dustin. Thank you, everyone. William, are we ready?
William Yue: Yes. So thank you very much, everybody, for joining the call. Thank you, Kyle and Reza.
Reza Taleghani: Thank you, everybody.
Operator: Thank you. Thank you for your participation. You may now disconnect your lines.
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