Good day, welcome to the KMD Brands Limited 2023 half year results release conference call. Today's conference is being recorded. Kindly note that there will be no online submitted questions taken. Only audio questions shall be taken for today. For those who have questions, please dial in to the audio line at Q&A time. At this time, I'd like to hand over the call to Michael Daly. Please go ahead, sir. Thank you. Good morning, everyone, thank you for joining us for today's presentation of KMD Brands' financial results for the first half of 2023 financial year. My name is Michael Daly, I'm the CEO of the group. I'm joined on the call by Chris Kinraid, our chief financial officer. We will be talking through the presentation advised on the NZX and ASX this morning. Unless otherwise specified, all financial numbers are in New Zealand dollars. Today's presentation will begin with the half year highlights, we will then discuss the group's financials and brand results before concluding with a trading update and outlook for the second half of FY 2023. I will begin with the financial highlights and achievements of the first half of FY 2023. Turning to slide four, we have the highlights of results KMD Brands has achieved in the first half of FY 2023. With record first half sales increasing 34.5% to NZD 547.9 million. This can be attributed to continued growth in Rip Curl sales, a strong recovery for Kathmandu, and record first half sales for Oboz. Our full-year growth margin increased by 100 basis points to 58.7%, reflecting improved Kathmandu performance assisted by favorable currency, more than offsetting continued elevated international freight costs and raw material cost pressures. Q1 sales recovered strongly following Australasian Covid lockdowns last year, in which more than 11,000 retail trading days were lost. We delivered strong Q2 sales growth on top of last year's post-Covid lockdown rebound, aided by the return of international travel and tourism. This contributed to the group's underlying EBITDA increasing significantly from NZD 10.2 million last year to NZD 45.3 million this year. We report an underlying NPAT of NZD 16.5 million for the half, which reflects a substantial turnaround from first half of FY 2022's underlying net loss of NZD 5.1 million. These results have enabled us to declare an interim dividend of NZD 0.03 per share. Moving to slide five. During the half, we continued to deliver on the four pillars of our group strategy. At a group level, we remain focused on building global brands. During the half, we saw sales growth across all brands and all regions. Rip Curl saw retail store expansion with net nine new stores and USA sales increased by 8%. Kathmandu's first deliveries were delivered to select wholesale partners in Europe and Canada. We saw Oboz achieve record first half sales as well as expand its product range into adjacent categories. In the digital space, we have successfully launched Rip Curl's loyalty scheme, Club Rip Curl, which has attracted over 120,000 members in the first five months. For the first time, Rip Curl customers are connected to the group's loyalty ecosystem, enabling a single view of the customer and personalized communication. We have also aligned Rip Curl retail store pricing with pricing on its online store. Kathmandu now has French, German, and Canadian websites, and Oboz online sales demonstrate significant growth opportunities, growing by more than 500% of last year's supply and passive base. KMD Brands continues to leverage operational excellence with our EBITDA margin increasing to 11.3% of sales on a rolling 12-month basis. We are continuing to grow scale across brands to maximize the efficiency of our overhead spend. Our portfolio approach to lease negotiations achieved a net 2% reduction across leases renewed in the first half. We have made excellent progress in ESG. With KMD Brands and all three of our individual brands now certified B corporations, becoming one of the first multinational companies based in Australia and New Zealand to have all of its brands individually certified. This is a testament to our commitment to setting ourselves high standards in social environment of impact, accountability, and transparency. The group has been recognized for ESG leadership, winning the Deloitte New Zealand Top 200 Sustainable Business Leadership award. We have submitted science-based targets to SBTi with 2030 emission reduction goals aligned to the Paris Climate Agreement, with assessment underway. Our Rip Curl Reconciliation Action Plan has been formally approved by Reconciliation Australia. We are delighted to have joined a network of more than 1,100 corporate, government, and not-for-profit organizations that have made a commitment to reconciliation for Aboriginal and Torres Strait Islander peoples. This has been a very productive first half of FY 2023. We are proud of the achievements made under each of our strategic pillars. Moving to slide six, you can see how we are progressing towards our short and medium-term goals. We are striving to achieve the short-term goals on the left side of the slide in the next one to two years and the medium-term goals within the next three to five years. Underlying EBITDA margin as a percentage of sales grew to 11.3% in the rolling 12 months to January 2023, with ongoing work to grow sales, control, and leverage expenses as we progress towards our EBITDA margin target of 15%. Looking at working capital as a percentage of sales, the January 2023 balance equates to 21.8% of sales over the last 12 months. We aim to reduce this to 18% in the short term as we normalize our inventory levels following the impacts of COVID supply disruptions. With Oboz still recovering from supply challenges in the first half of the 2022 calendar year, we still saw over $50 million in US dollars in sales in the rolling 12 months to January 2023. We're on track to achieve our medium-term target of US $100 million sales, considering opportunities to further grow the North American wholesale customer base, online growth opportunities, plans to expand the brand outside of North America, and further product range expansion. In terms of regional growth opportunities, North America is a key market for Rip Curl. Rip Curl is a top three brand in other key regions, and there's a real opportunity to grow the brand's top three status in the North American market. In the rolling 12 months, January 2023, Rip Curl North American sales were NZD 146.4 million. Sorry. 146.4 million NZD. We are aiming to hit a target of approximately NZD 200 million sales in the medium term. In terms of Kathmandu, we have the medium-term goals of both reinforcing market leadership in our home Australasian market, as well as executing on international growth opportunities for the brand. Kathmandu currently has 155 stores in Australasia, this number has not changed significantly over recent years as we have navigated the impact of COVID on consumer shopping preferences. We've seen an opportunity to ramp up our retail store presence by 40 stores-50 stores in the medium term, focusing on suburban and regional shopping center opportunities in Australia. Kathmandu has begun the journey of growing internationally with the recent launch of new websites in France, Germany, and Canada, and the first wholesale deliveries to select European and Canadian wholesale partners. We look at this as a testing phase with these wholesale partners to learn consumer product and channel preferences in each market. As Kathmandu expands into North America, Europe and beyond, our sales target for Kathmandu International remains NZD 100 million. Moving on to slide seven. I'm very proud that KMD Brands and all of its brands have achieved B Corp certification. In 2019, Kathmandu made history as one of the first significant apparel brands in Australia and New Zealand to become B Corp certified. In 2023, Rip Curl and Oboz have achieved certification, as well as the Rip Curl wetsuit factory, Onsmooth in Thailand. The Kathmandu brand achieved recertification with major improvements that were communicated by the B Lab. Kathmandu Brand is one of the first multinational companies based in Australia and New Zealand to be certified in its entirety, and one of only 45 listed businesses globally out of more than 6,000 B Corps. This globally recognized certification demonstrates commitment to leading in ESG and is a significant achievement for a company our size, complexity, and scale. Being B Corp certified is recognition of our commitment to balancing profit with our impact on people and planet. This is a great achievement for our business and our people. I'll now hand over to Chris to cover the financial slide. Thanks, Michael. Moving on to slide nine. We'll now go through the group's profit and loss for the first half of FY 2023. Just a reminder, our statutory results include the adoption of IFRS 16 for comparability, the impact of it and the notional amortization of Rip Curl and Oboz customer relationships have been excluded from our underlying results. We achieved record sales in the first half, with group sales increasing 34.5% to NZD 547.9 million. First quarter sales recovered strongly, cycling off the latest COVID lockdown last year, in which more than 11,000 retail trading days were lost. We delivered strong second quarter sales growth on top of last year's post-COVID lockdown rebound, supported by the return of international travel and tourism. Statutory EBITDA was NZD 90.8 million, up substantially on last year. On an underlying basis, excluding IFRS 16, EBITDA was NZD 45.3 million. While the group continued to experience elevated international freight costs and raw material pressures, gross margin increased by 100 basis points to 58.7%, which reflected improved Kathmandu performance. Operating expenses returned to historic levels post-COVID. First half FY 2023 operating expenses are 50.4% of sales, demonstrating operating leverage year-on-year with sales recovery post-COVID lockdown last year. Moving to Slide 10. The group achieved a record sales result in the first half. Strong diversified sales growth across our brands, channels, and regions. Kathmandu sales grew by 51.2% after a strong recovery. Rip Curl grew by 18.8%, and Oboz grew by 124.3%, recovering after supply chain challenges last year. We saw strong sales growth across direct-to-consumer, wholesale, and licensing channels. In retail sales, store sales grew by 46.2% as customers returned to in-store shopping, moderating online sales, which decreased by 2.2%. Wholesale sales grew by 27.1%, assisted by Oboz sales growth following last year's supply constraints. By region, Australasia sales grew by 33.6%, cycling COVID lockdowns last year. North America sales grew by 52.8% with Oboz sales recovery and Hawaiian stores capitalized on the return of international tourism. European sales grew by 6.9%. We'll now have a closer look at online sales on the next Slide 11. On Slide 11, we're seeing consumers returning to shopping in stores. Our omnichannel offering provides customers the choice of in-store and online shopping. While online sales moderated in the first half of the year, group online sales still remain significantly above pre-COVID levels, growing at a compound annual growth rate of 17.4% since the first half of FY 2019. Kathmandu online sales have normalized at NZD 26 million, comprising 13.6% of direct consumer sales. For a total of NZD 17.8 million on online sales, comprising of 9.6% of direct consumer sales. Oboz online remains a significant growth opportunity, increasing to NZD 2.8 million off last year's supply impact effect. On to Slide 12, we continue to maintain operating expenditure investment while leveraging sales growth. Despite COVID lockdown sales recovery, sales grew by 34.5% while operating expenses grew by 20.3%, excluding one-off COVID assistance received last year. As a result, operating expenses as a percentage of sale reduced from 50.4% to 50.4% in the first half. Of the dollar increase in operating expenses, nearly 80% related to variable costs of operating stores following last year's COVID lockdown closures. We have held our brand and marketing investment, and we expect to do that through deliver leverage as sales growth continues. FY 2023 full-year operating expenses are expected to be around 48% of sales, and there are ongoing initiatives to further reduce annualized operating costs by up to 2% of sales by 2024. Moving to our balance sheet on Slide 13. We have a strong balance sheet position, which leaves us well-placed to invest in organic brand growth and to strategically invest in inventory where required. The higher inventory balance of NZD 318.8 million reflects investment in Oboz's inventory to meet the increased forward orders and while strategic Rip Curl investments in wetsuit raw material for perennial styles to mitigate international supply challenges. Rip Curl inventory balance is expected to reduce in the second half as orders placed during the first half align to improved supply chain timelines. Kathmandu's inventory is well positioned, sitting NZD 24 million higher than July 2022. In terms of aging, clearance stock levels are below July 2022 and inventory obsolescence provisions representing 1.4% of gross inventory on hand, 50 basis points below July 2022. We expect the inventory balance to reduce to between NZD 270 million and NZD 280 million by July 2023, depending on currency translation and final permanent business transactions. For January 2023 year to date, NZD 4.9 million, we have significant funding headroom of over NZD 200 million. Moving to Slide 14. Operating cash flows is impacted by the temporary inventory build. We expect that underlying inventory will underpin the traditionally strong operating cash flow generation in the second half of the group. The directors declared an interim dividend of NZD 0.03 per share, fully franked for Australian shareholders and not computed for New Zealand shareholders. The record date will be the June 15th 2023. The payment date will be the June 30th 2023. Moving to S lide 15 on a rolling 12-month view. This is the second half of FY 2022 combined with the first half of FY 2023. We're pleased to report the group sales were well over NZD 1 billion. The first time since Rip Curl's acquired, the group has experienced a full 12 months of trade without significant disruption from the COVID pandemic. We've now surpassed the acquisition expectation of a global NZD 1 billion outdoor company. In terms of sales mix for the rolling 12 months, Rip Curl made up 52% of sales, Kathmandu, 40%, and Oboz made up 8%. The underlying EBITDA for the rolling 12 months was NZD 127.1 million. I will now talk through the segment results and performance of each of our brands. Moving to Slide 17, for Rip Curl. Yeah, Rip Curl's sales results were strengthened by the growth across all channels. Total sales up 18.8% to NZD 306.4 million. Direct consumer sales growth was especially strong in Australasia after the COVID lockdown of last year, with Hawaii also performing well off the back of the return of international travel and tourism. The direct consumer channels, including owned retail stores and online, generated tangible sales growth of 13.9%. While online traffic reduced year-on-year, despite from the COVID lockdown boost last year, online sales continued to be at well above pre-COVID levels. Wholesale sales were up 2.2% at constant exchange rates, maintaining the strong growth delivered during COVID, despite soft and mixed market Rip Curl products being strategically stocked for retailers. EBITDA was up 11.4% to NZD 37.6 million, despite the impacts of gross margin mix, freight, and higher distribution costs. Now turning to Kathmandu's results on slide 18. Kathmandu's performance in the first half of FY 2023 was attributed to a strong post-COVID sales rebound and recovery. We saw total sales increase 51.2% to NZD 194 million, driven by a rebound in Australia, 59% up, after last year's lockdown. The return of domestic and international tourism in New Zealand was +22%, with international sales of NZD 1.1 million, which included the first deliveries to selected wholesale customers in Europe and Canada. Online sales remain significantly above pre-COVID levels and have grown at a compound growth rate of 12.8% for the first half of FY 2023. We saw total same store sales growth including online of 48.8%. Seasonally, gross margins increased by 580 basis points, driven by some currency benefits and a deliberate and careful moderation of the historic high inventory model. Moving to Slide 19. Oboz has recovered from the significant supply challenges that impacted last year's result. The Oboz brand continues to diversify its simpler product offerings and channel to market, with first half sales increasing by 124.3% to NZD 47.5 million. Online sales grew strongly with associated high growth margins, increasing the mix of direct consumer sales. This channel remains a significant growth opportunity for the brand. Gross margin decreased 50 basis points due to elevated international freight costs over the last 12 months. Operating expenses include the addition of brand and product teams, which we expect to leverage as sales growth continues. During the half, North American wholesale operating margins remained below historical levels with the full city of increased wholesale selling prices to be realized in the second half. We're now seeing international freight costs trending towards historical levels. I'll now hand back to Michael to talk through the outlook. Thanks, Chris. Moving to Slide 21, remain clear on our medium-term strategic priorities. We will continue to build global brands with the ongoing goal to grow comparable sales for each brand while executing new growth initiatives. We will focus on improving Rip Curl's North American market share and operating margins. We aim to reinforce Kathmandu's market leadership in the Australasian market by opening 40 new stores-50 new stores over the next few years. We're also executing new international sales growth opportunities through wholesale and direct-to-consumer channels. The Oboz opportunity is to deliver sustained growth in both wholesale and direct-to-consumer channels, both within North America and globally. With the successful launch of our Club Rip Curl loyalty program in Australasia, we are planning to roll out in the U.S. and Europe over the next two years. The immediate goal is to launch Club Rip Curl online in the USA, followed by a full omnichannel launch in North America. Planning is well underway for the relaunch of Kathmandu's loyalty program with an exciting new value proposition. We also plan to implement personalization at scale across Kathmandu and Rip Curl. Oboz will be launching our B2B platform utilizing Elastic's technology. We will focus on leveraging operational excellence at a group level with ongoing inventory management driving towards a working capital target of 18% of sales. We will also continue to leverage the operating cost base to help deliver the group underlying EBITDA margin target of 15% of sales. The ongoing consolidation of procurement and supply chain operations is an important priority for achievement of the operating margin target. Lastly, we'll continue to lead in ESG with the aim of rolling out circular business models across brands. We are currently launching the Kathman-REDU apparel repair and recommerce pilot in select Victorian stores in Australia. We'll continue the global expansion of Rip Curl's TerraCycle wetsuit take-back and recycling program. We are progressing well towards approval for SBTi for our science-based targets and the development of our emission reduction roadmap. Turning to our trading update and outlook for the second half of FY 2023 on FY 2022. Positive first half sales momentum has continued through February with strong diversified sales growth across brands, channels, and regions. In terms of the trading update, group total sales increased by 31.9% year-on-year in the month of February 2023. We saw Rip Curl sales rise by 13.3%, cycling FY 2022 growth. We can see Kathmandu's sales momentum continue into the second half of FY 2023, with year-on-year total sales increasing by 20.8% in the month of February. Oboz's rebounded from last year's supply challenges. Please note that February is not a significant trading month, nor necessarily indicative of the results for the remainder of the year. Our positive second half FY 2023 outlook is supported by several factors, including the positive direct-to-consumer sales trend continuing through February. The group is also well-positioned to continue to benefit from the return of international travel and tourism. We've seen holiday destinations such as Hawaii, Queensland, and New Zealand, as well as Australian airport stores achieving sales growth year-on-year and tracking above pre-COVID levels. We potentially enter a period of challenging global market conditions, the group is well-diversified. Product ranges across all three brands appeal to a diverse range of consumer interests, ages, and demographics. We acknowledge that the consumer outlook remains uncertain, with high global inflation and rising interest rates expected to impact consumer demand. On the wholesale side, we are seeing retailers around the world strategically de-stocking and increase promotional activities from competitors. The second half is traditionally the strongest cash-generating period for the group, and we remain well-capitalized to continue to invest in the long-term international expansion of our global house of brands. This now concludes the formal part of today's presentation. I want to thank all of you for taking the time to join us on this call. I would now like to open the call for questions. Over to the operator. Thank you. Again, kindly note there will be no online submitted questions taken, only on the audio for today. For those who have questions, please dial into the audio line at this point if you have not already. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Again, that is star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. At this time, we will go to our first question. Marni Lysaght of Macquarie. Good morning, Michael and Chris. I just kind of would like some just more color around, I guess the growth margin expansion in Kathmandu. I know you've called out, you know, FX being a benefit in the first half and moderation of the high-low discounting model, which will be the second, you know, half where you've started to deliberately moderate that, you know, it's starting to kick off, you know, second half 2022. Like, 'cause I'm understanding your clearance mix in the first quarter of FY 2022 and just trying to kind of triangulate, I guess, cycling lockdowns and, you know, how much of the expansion is FX versus moderation of pricing. Yeah, look, obviously our group margin is up a full point. Of course, obviously that's a blend of all of our margins of each of our brands. In terms of the Kathmandu brand, as you say, quite correctly, some of the margin uplift we've seen in Kathmandu is a function of both some currency, obvious currency, as well as ongoing inventory management. Obviously the mix of inventory that we've got and our level of clearance, as well as our continued high low moderation. Like, from our point of view, there's not one particular thing that is helping that margin lift for Kathmandu. To be honest, they all play a key role. I guess most importantly, you know, we certainly face some increased FX headwinds with obviously where the dollar is at today. At the same time, our clearance levels with Kathmandu are really well positioned. We've been quite aggressive through the last six months in just making sure that we take any tough call on any product that we have and see that in Kathmandu inventory numbers, which are down year-on-year. We're really comfortable where we're at and, you know, gives us great confidence for margins going forward, not only for the Kathmandu brand, but our other brands. Just to follow up on that, just to kind of refresh our memory how we should be thinking about, I guess, FX to task, given current hedging, and FX going into next year? I hate to shove another question into one, but just you are gonna comp this winter at Kathmandu having a phenomenal growth margin in the back end of second half 2022? Just the way to be thinking about that given, you know, you have lowered the stock levels and the potential macro outlook? Oh, yeah. Our stock position is really good. You know, we're seeing in the market today that, yes, I mean, if you wanna sell some volume at discount, you can, but we're certainly not seeing the strong need for us to discount our brands. Our brands are wanted by the consumer. You know, we can certainly display margin discipline. As I said, I think before, Marnie, that, you know, we've had the kitchen sink thrown at us in terms of margin over the last six months, 12 months, 18 months, and you wouldn't even know it because our margin continues to go up. That's a function of the strong management of our inventory, being aggressive when we need to be and being careful where we take our risks. Yeah, from our point of view, we're definitely facing some headwinds with the FX. Important to note that in today's group we have a diversified group. While we will face some headwinds with a stronger US dollar relative to the New Zealand and Australian dollar, we also have 20% of our sales over in North America. It gives us a obvious natural hedge because obviously the translation profits, translation of those profits will be stronger as well. From that point of view, it does give us somewhat of a natural hedge. Not a full natural hedge, again, it just, I guess, supports our confidence in our margins, not only historically, which has continued to trend up, but into the future. Just like you've given us before, kind of, indication of what the hedge rate is versus prior periods. Kind of what does the hedge rate look this half and, you know, early first half 2024 versus prior periods? I mean, we do, Marnie, Chris here, we do hedge, obviously hedge our 12 months for a reason, well protected. You know, when the dollar popped back up, a lot of people took advantage of that recently. That average rate, for example, you know, from a activity two to a activity on the Aussie dollar, for example, versus the U.S. dollar. It's not a significant movement overall, and something we can definitely manage through, you know, product teams being aware of the hedge rate 12 months out. Just to clarify, you can manage that through price. Is that what you just said? Price and product. That's price and range. Price, yeah. Yeah. All right. Excellent. Thanks for answering my questions. I'll jump back in the queue. No worries. Thanks, Marnie. We will hear next from Bianca Fledderus with UBS. Thanks, Michael and Chris. First question for me is just on your North American Rip Curl growth. Obviously, growing your market share there continues to be one of your key priorities, as you mentioned. Could you share what you estimate your current market share is in that region for the Rip Curl brand and what you estimate it would grow to when you reach that $200 million in sales that you mentioned? Yeah, I think, yeah, referring to what's in the pack as well as what we've expressed previously, you know, our perception of where we sit in the market puts us at anywhere between the number five and number six brand in that market. You probably saw it more as probably our position in the market relative to our total chunk of the market, because that's obviously a bit of a hypothetical. Yeah, we see ourselves as number five or six brand in that market. You know, particularly in terms of our wholesale positioning, we feel strongly that if we were to be successful in continuing to take market share and move into a top one, two or three brand, that we're looking at a circa $100 million opportunity. That's what we've been pursuing. That remains our ongoing focus. Okay. Yeah, I guess just following up on that, could you give an indication around what sort of CapEx spend we can expect, given currently if I'm wrong, but I believe it's a lot of DTC store growth for that region from Rip Curl. Yeah, I think, we're relatively comfortable where our capital expenditure sits, to be honest, on a go-on basis. You know, we've roughly run at NZD 30 million-NZD 35 million CapEx per year. We feel pretty comfortable with that. I say that because we've had some big chunky IT spends with rollout of new POS systems and loyalty programs, particularly across the Australasian market, which is our bigger market. As they slow, we'll save some CapEx there and redirect that to some of the ongoing growth, in terms of DTC, whether it be online or in-store. Yeah, we don't see a change from our history in terms of our capital spend at this point in time. Okay, great. Thank you. On your underlying EBITDA margin target, there's obviously a good improvement in underlying EBITDA margins compared to FY 2022. At 8%, that is still quite a big jump to your 15% full year targets. I guess second half margins, of course, are usually higher, but are you still expecting to reach a 15% margin for FY 2024, or are you expecting that to be more realistically FY 2025? Look, we're trying hard to get there as quickly as we can. I wouldn't obviously want to be giving out a specific forecast, but, you know, we remain committed to achieving our 15% target. We certainly, the Kathmandu and the Oboz brands both have much better second half based on the seasonality of their products. Kathmandu on the back of Australasian winter and Oboz on the back of Northern Hemisphere spring, summer. We obviously see that EBITDA margin improve significantly for the group in the second half. Yeah, look, we'll be pushing as hard as we can to achieve our 15% target as quickly as we can. You know, maybe a stretch FY 2014. Sorry, FY 2024. Certainly, we'll be giving it every intent to try to achieve it. Yes. Okay, great. Thank you. That's all for me. We'll go next to Andrew Steele with Jarden. Andrew, your line is open. Please go ahead. Hi, Andrew. Can you hear me, Andrew? We're not able to hear you. Again, we're not able to hear you, Andrew, if you're on mute. Well, at this time, then we will move to our next question from Mark Wade with CLSA. Good morning, guys. Hi. Good morning, guys. Thanks for taking the question. Just trying to get a sense of this opportunity for Kathmandu internationally, the touted NZD 100 million target that's been out there for about a year or so. How do you get there from the NZD 1 million or so you're doing today? Is it just about, again, getting that brand awareness and recognition globally? Is it trying to get a bigger range, more customers? What's the secret sauce on how to realize that target in a reasonable timeline? Yeah, look, the first two key points there. While that target's been out there for a while, you've got to remember we only started our first delivery in August 2022, so we've only just started delivering. Really the clock has really just started running for this first half. This is our first half with those deliveries. We're also very consciously and strategically in a test or a soft launch phase. We're only dealing with select accounts, so we're talking, you know, 20 accounts, 25 accounts that we're working with in Europe and Canada. They are very small numbers to start with, but, you know, if you look at what that likely number's gonna be over an annual basis, and you're talking 20 accounts-25 accounts, the average sale per account is actually pretty healthy. I say that because, you know, we're dealing with 25 accounts, so if we were to ramp up interaction with all the possible accounts we could have in the Northern Hemisphere, we're talking thousands to more than 1,000, a couple of thousand accounts we could be dealing with. So we're really happy with where we're at. We strategically wanted to start with a soft launch just to make sure as an organization we're really clear on what the consumer wants and expects from a brand like us in those, the markets of Europe and Canada, and also to understand what our wholesale partners expect from us. In terms of us realizing the opportunity to take it from a couple of million to tens of millions to hundreds of millions, really the main focus is expanding that distribution. Taking that from the 20 accounts-25 accounts to 100 accounts- 200 accounts to 300 accounts. Really that comes down to the timing at which we think is appropriate. We wanna do our international expansion on our own timeline. From my point of view, we don't wanna take too many risks. I think we could go out To expand that distribution and make a more concerted push into one or more geographies that we're ready for it. And when we are ready for it, we wanna as well as a couple of later this year. We'll be in a position with a real opportunity to push aggressively into all Northern Hemisphere markets as well. I think it most likely will continue on a soft launch in some markets and really try to pursue it more aggressively in one or a couple of particular geographical markets. When we do that and go more aggressively, that's when we'll take a little bit more risk, and that will involve some more marketing spend, that will involve a couple of stores, and that will involve tightening up our e-com assortment and our distribution or fulfillment strategies to those consumers. Look, I think we're realistically another six months away from that. We'll continue this soft launch, and once we've got a full year of data and a full year of trading results, we'll be in a much better position to decide where we really wanna take that more aggressive approach geographically. That's helpful context. Thank you, Michael. In closer to home on those store opening plans in the Kathmandu brand, you know, what's the thinking on how to get to that 200? Is do you need to acquire some of the existing competitor, or is it just about rolling out stores in the existing geographies there? I mean, it looks like you haven't opened any for at least on a net basis anyway. Yeah. If you look at our assortment of stores on the Kathmandu side, we think we've got a good segmentation of stores across, larger format destinational mall stores, smaller format, high street or airport stores, through to your, you know, mega mall, destinational malls to our suburban, outer suburban regional malls. We think we've got a good segmentation of stores that gives us the flexibility to expand our network. If you look at our penetration in New Zealand, what we've got circa 45 stores-50 stores across New Zealand, a population of 4.5 million. We've got just over 100 stores in the population of 25 million in Australia. We do think we underrepresent in the Australian market, there are a number of, outer suburban, inner city, as well as, regional locations where we're not represented and we think there's an opportunity for us. Certainly there are plenty of other examples of retailers in this market, they have a lot more stores in Australia than just 105 stores. Okay. I'll leave it there. Thanks so much. No worries. Thanks, Dan. We'll go back to Andrew Steele with Jarden at this time. Go ahead, Andrew. Good morning, guys. Can you hear me? Yes, got ya. Yeah. Yeah, Yeah. Yeah, we got ya. Great stuff. Okay. The first one for me is just on the whole outlook for the wholesale market. You've noted retailers destocking and sort of some sort of inconsistent activity. You know, for me, your forward in half, could you provide some color as to your expectations for how wholesale performs year on year for Rip Curl and Oboz? I mean, what you see in our half-year results is, you know, we've certainly seen our wholesale performance moderate relative to our direct consumer performance. You know, we're seeing where we're interacting with the consumer directly, we're seeing continued strong performance, all brands, all markets, all regions. There has been a bit of a change in that mix as consumers get back into store. Our e-com has softened up a little bit. Overall, our direct consumer channel, all brands, all regions, performing really strongly. On the wholesale side, we've certainly seen that soften up. We're still seeing some growth. Obviously, Oboz are seeing great growth, but that's on the back of supply chain issues of last year. We've seen that most growth moderate. We're seeing that growth moderate because basically all retailers out there, either spooked by all the media news about potential recession or they just have too much stock and are strategically destocking to make sure they're not taking so much risk. What we're seeing consistently across the market is retailers are holding off on taking delivery, willing to take the risk that if they need more stock, they can chase it. Not willing to put that same commitment down. We're seeing that across each of our brands, across both the surf market and the outdoor market. What does that mean? We think for the next 6 months or 12 months, that it'll take six months, probably six to nine months for that cycle to finish where everyone destocks and then they'll be aggressively chasing stock again. From what we see, we still think there's growth opportunities. We're still posting growth. That growth is just moderating. At some point in time in that six to nine-month period, if the consumer continues to show strong demand across outdoor and surf, which there's no signs of that stopping as yet, we certainly know that the retailers are gonna be chasing stock. From our point of view, just has moderated a little bit, that wholesale demand, but we're still in a growth position and, you know, we've got the stock to meet the consumer's needs on a direct to consumer. I think it's gonna be probably moderate the demand for six to nine months, but certainly there's gonna be a lot of retailers chasing stock. We think our outlook for wholesale moderates, you know, more single-digit growth for the next six to nine months. At some point in time, assuming the consumer demand remains strong, we should see another bounce beyond that deep bottom level. That's great. It's very, very helpful. Just in terms of gross margin, and just to clarify, because unfortunately my line cut out during Marni's questions. Do you expect when you're saying you expect gross margin to improve in the second half and then into 2024, you see ongoing gross margin improvement trends. Just to be clear, I assume that's driven largely by pricing that's given the FX outlook. Yeah, look, with a group as diversified across channels and geographies and brands as us, gross margin is a fairly detailed conversation, to be honest. That said, as an overall group point of view, obviously we're up in margin in the first half. We expect in the second half, we'll remain relatively flat. You know, we might see some improvements on the prior year, but we're not expecting any dramatic changes, to be honest. We think in terms of medium term on margin, as we've said before, we've had the kitchen sink thrown at us in the last couple of years on margin. Our margin has only improved. There are clear pockets in our organization where our margin is not where expected to be, and that's because the full impact of price rises has not yet cycled through. We expect to see that cycle through in the second half, which gives some underpin some margin strength to offset any other headwinds we may face, whether that be, consumer sentiment, whether that be, other competitive activity. We remain relatively, you know, happy with where our margins are at. If anything, in the short and medium term, we'd be hopeful of continued increments in our margin towards our goal of the 15% EBITDA number line. Great. Thanks. Just on the two percentage points of OpEx improvement that you were talking to, for FY 2024. I mean, could you sort of just talk about some of the parts within this? I mean, is there any specific cost out? If so, could you quantify that? Elsewhere, I mean, could you be more sort of specific as to the measures that you are taking to achieve this margin improvement or is it simply just, you know, operating leverage coming through? In terms of our operating costs and our operating leverage specifically, you know, there's not one particular area. Our focus has been so much in the last 12 months of just actually having our stores open again and overcoming our supply chain disruptions. The harsh reality is when you're focusing on those type of things, it does mean that you can't necessarily focus on a whole bunch of other things. From our point of view, we know we've got continued work to do to moderate our expenses, and particularly in an inflationary environment. We are continuing to focus on that. There's not one particular pocket, to be honest. As we mentioned in the past, we've seen some good results of portfolio negotiations across our lease exposures. Obviously, we've seen a fairly aggressive lift in everything from distribution, labor to just freight costs in terms, domestically. We're seeing that start to moderate. We've certainly seen our international freight costs moderate significantly over the last, six months as they start to return to more historical levels. Obviously, we're continuing to work on our in-store labor costs to make sure that we continue to moderate that, as well as just broadly looking at our overall, head office costs and even our marketing costs. We've been quite robust with that. We were quite aggressive on lifting the spend of our marketing spend, particularly, coming out of COVID, and we've held that flat in this first half of the year. Certainly as we get to the second half of FY 2024, we'll see that marketing spend continue to moderate down as well. There's no particular one pocket. It's really across the board in our broader drive to bring the brands together. You know, we're still completing integration of our brands on the back end and completing that integration. Okay. Thank you. Just this one last one from me. Reflecting your confidence, would you say that year-on-year improvement in debt is achievable by year-end? Yeah, we expect that level of that, Andrew. Yeah. We sort of expect that, you know, will there be some improvement or sort of broadly flat? I won't go into more guidance than that, Andrew. In terms of all the factors that we expect you to figure out. Yeah. Thank you very much for, your good answer to the questions. Thanks, guys. Yeah. Thank you. We'll go next to Kieran Carling with Craigs Investment Partners. Morning, guys. Can you hear me okay? Yeah. Hi, Kieran. Yeah. Great. Just thinking back to, you know, the last full year result, there was some commentary around M&A opportunities. I think at the time you were, you know, sort of indicating that a buyback might look like a better option, you know, where the share price is currently. Just wondering if you can shed any light on, you know, whether you expect to you know, see that any time in the near future or whether that's an option? There's probably no change from our commentary of six months ago, to be honest. Where we are today, our main focus is in just delivering on the opportunity that our brands have in local and international markets. Obviously, we've got some work to do to continue to moderate that in-inventory down and achieve our broader 6% EBITDA, 8% working capital. I think once we get there, we'll be in a positive net cash position, which should be, you know, six months, nine months away. Once we're there, we'll assess those options, whether they be M&A and/or further dividend enhancement or capital management. At this point in time, to be honest, our main focus here is just on executing on the business and continuing to grow the business. That's our main focus and we've certainly got all those other things in mind, but not our most immediate priority. Cool. Thank you. Just thinking about the strong sales that, you know, you've seen through the first half and in February, particularly for that Kathmandu brand. Just wondering, you know, what the mix has been between sort of the core product range and maybe some of the new summer gear that you've been selling. Whether you expect any of, you know, the bad weather that we've had through the start of the year, particularly in New Zealand, has pulled forward any of those rainwear and insulation sales from the second half. Yeah, I think it's. Yeah, look what we're seeing, you know, we never like to point to weather, of course, but, you know, it's been very wet in the North Island, New Zealand, so our rainwear sales have been pulled forward in that part of the market. It's been particularly hot and dry on the eastern seaboard of Australia with, you know, near 40-degree weather in Sydney all last week. To be honest, our rainwear sales completely disappeared in that market. Look, it's a bit of both across the diversification of not only the Kathmandu brand, but the group. It's hard to point to any one particular thing. Yeah, in terms, specifically in terms of summer mix versus the core range, you know, I would say both remain relatively popular. The core range has continued to be strong. There's been a lot of, you know, basic insulation, even right through summer, sells really well because people go on holidays over to USA or Japan or Europe. At the same time, we've certainly seen good growth in things like T-shirts and shirting and shorts as we continue to try and build out our spring/summer offering. We're, we're pretty happy with how things are progressing, and that's gonna be an ongoing focus for the Kathmandu brand to become a 365-day destination for consumers. Cool. Thanks for that. Just last one from me. Just if you're able to, you know, comment on any mix shift that's taken place between your normal stores and outlets, and any, you know, change in margins across those two distribution methods? No real change in margins across those two. If anything, no real change in margins, to be honest, across, you know, as we've said, our margins are up across the group. What we're seeing is slight margin mix across each of those channels and across all of our brands. In terms of what we're seeing, there's no doubt, I think as we alluded to about six months ago, we are starting to see or have seen our outlets performing really strongly in all markets. We think that's two reasons. There's no doubt there are some consumers that are hurting with higher interest rates and inflationary pressures. In my experience, when that happens, you will see a positive impact on our outlet performance. We've certainly seen that through not only the back end of last financial year, but through this first half. Outlets performing really well across both brands, both Kathmandu and Rip Curl in all markets. At the same time, our outlets 12 months ago were significantly under stocked, particularly on the Rip Curl side. We basically, on the back of great sell-through, we really had no stock. To be honest, we think our strong outlet performance, particularly on the Rip Curl side, is as much about having depth of inventory as it is what the consumer might be up to. Overall, definitely I'd say outlets are performing slightly stronger than our primary flagship stores at the moment, but not that noticeable, to be honest. Great. Thank you. That's all from me. Okay. Thanks, Matt. At this time, with no other questions in the queue, I will turn the call back to Michael Daly for any additional or closing comments. Thank you, Claire. That's all. Thank you everyone for joining, and, yeah, that's all from us. This concludes today's call. Thank you for your participation. You may now disconnect.