Hello, welcome to the H&M conference call for sixth month report for 2023. Please be advised that today's conference is being recorded. For the first part of this call, all participants will be in a listen-only mode during the speaker presentation. Afterwards, there'll be a Q&A session. If you'd like to ask a question during the Q&A session, please register via the link in the confirmation email. Today, I'm pleased to present Nils Vinge, Head of Investor Relations. I will now hand you over to our speakers. Please begin when you are ready. Thank you, hello, and welcome, everyone. Today, we're presenting our six-month report, 2023. With me in the room is our CEO, Helena Helmersson, and our CFO, Adam Karlsson. After the presentation, we will answer your questions. I leave over to you, Helena. Thank you so much, Nils, and warm welcome to you all. Now that the second quarter is behind us, we can conclude that we have taken a number of further important steps towards our goals. We increased sales in many markets, despite a reduced purchasing power. With June almost over, we can see that the summer collections have been well-received, despite unfavorable weather conditions that resulted in a late start of the season compared with last year in many markets. The external factors that influence purchasing costs continue to improve. At the same time, work on the cost and efficiency program is proceeding at full speed. Many of the changes that we have made in recent years are starting to pay off. We are also continuing our initiatives with even greater focus on the customer offering. At the same time, we want to give our customers an even better experience, with more inspiration and improved convenience in our physical stores and digital channels. We can clearly see that the physical store is important to our customers, and in-store sales have increased in the year- to- date, despite 300 fewer stores. At the same time, online sales continue to develop well. Around 30% of sales are online, which is at the same level as last year. This, once again, shows the strength of having both physical and digital sales channels, which strengthen and complement each other. We are therefore continuing our efforts to integrate the channels further to create a customer experience that is as smooth and inspiring as possible. At the same time, we are optimizing our store portfolio further to ensure that we have the right number of stores in the right locations, at the right terms, and with the right space. We have a well-positioned customer offering and are fully focused on meeting customers' ever-increasing expectations of affordable and sustainable fashion. Though the situation in the world around us remains tough, things are moving in the right direction in many of our areas. To reach our long-term goals for 2030, we have three main growth areas: H&M, portfolio brands, and new growth and ventures. First and foremost, there is H&M, which is one of the world's biggest fashion destinations, with several billion visits a year globally, in-store and online. We are continuing our intensive efforts within H&M to further elevate the customer experience in-store and online in order to meet customers' ever-increasing expectations. We are improving the assortment and broadening the offering with more products, as well as services for added convenience when customers shop with us. We are deepening our customer relationships and striving to give customers unbeatable value in the form of fashion products that are both affordable and more sustainable. One example of this is that we are gradually increasing the proportion of sustainable and recycled materials in our products. In 2022, 84% of all materials were either recycled or made in a more sustainable way. This figure includes a 23% share of recycled materials, taking the company closer to its goal of 30% recycled materials by 2025. The third quarter has started well, with increased sales in June. In the period of 1st to 27th of June, sales increased by 10% in local currencies compared with last year. One of the main drivers was womenswear at H&M. The latest summer collections from H&M womenswear in our stores right now offers dresses and caftans, as well as summer blazers in light, neutral shades. Linen is still big and can be seen in most type of garments, with the summer look further enhanced by high summer knits. In May, we were once again able to offer our customers a new and inspiring designer collaboration, and this time it was together with the house of Mugler. The collection showcased well-priced, exceptional fashion garments and accessories for both women and men, and was extremely well received. Over the past year, we have made several investments in H&M's lifestyle brands. For example, we have continued to develop H&M Beauty, which offers a wide range of own and external brands, and is developing strongly both in stores and online. Among other things, we have developed a new store concept and an updated range in the premium segment. The first flagship store that opened in Oslo recently received a fantastic reception. Our expansion is taking place with a focus on increasing sales in all our channels. For a number of years, we've been making major long-term investments with an emphasis on the digital. The physical stores are still incredibly important. Customers appreciate having stores available where they can try on clothes and be inspired. The role of the physical stores has also been developed to become an important part of the supply chain, particularly as part of a last mile solutions. Our second growth area, portfolio brands, which is COS, ARKET, Weekday, Monki, and & Other Stories, increased sales by 17% in SEK and 12% in local currencies in the 2Q. During the quarter, we saw, for example, continued strong sales development for COS and ARKET. COS has carried out an extensive upgrade of its assortment and strengthened its position in the premium segment. Our third business area, new growth and ventures, covers new business models and investments in startups. We are continuing to invest in companies and to support these companies, for example, with knowledge and capital. Through a range of exciting and innovative partnerships and circular business models, we are working with entrepreneurs to create further value. Among other things, we are continuing to invest in startups that enable a more circular fashion industry that is in line with our focus on leading our industry towards a more sustainable future. We currently have more than 25 holdings. We recently led an investment round in Kintra Fibers, which has developed a bio-based polyester that is compostable and has the potential to be biodegradable, too. Kintra Fiber is designed to address the environmental impact of traditional polyester at every stage, from production to end of life. The H&M Group's ambition is to lead the change towards achieving a circular fashion industry. We use our size and knowledge to drive positive change. In addition to investments in our own business, we therefore provide financial support to projects that contribute to reducing emissions throughout the value chain. This is part of our goal to halving greenhouse gas emissions by 2030. As part of this, we are working to purchase 100% renewable energy in our own operations, reduce the use of fossil fuels, and instead increase the use of renewable energy among our partners and suppliers. We recently invested in two solar facilities in Sweden and the U.K. that take us one step closer to reaching our ambitious climate goals. Looking ahead, we can state in conclusion that despite the tough situation in the world around us, the H&M Group stands strong with a robust financial position, stable cash flow, and a well-balanced inventory. Although the world around us remains challenging, we are seeing several areas where developments are going in the right direction. Combined with our investments and efficiency improvements, there are good prerequisites for continued growth and improved profitability. Our goal of achieving an operating margin of 10% in 2024 remains in place. Thank you so much, everyone, for listening, and we will now be happy to take your questions. Thank you. As a reminder, if you'd like to ask a question, you can press star, followed by one on your telephone keypad. If you'd like to remove your question, you may press star, followed by two. Please ensure you're unmuted locally when asking your question. Our first question for today comes from Fredrik Ivarsson of ABG Sundal Collier. Fredrik, your line is now open. Please go ahead. Thanks much. Hi, everybody. One short question from me, just on cash flow. You're reducing the stock in trade very impressively, obviously down 20% in local currency terms, but working capital in total is still roughly at the same level as last year or end of last year. Could you maybe provide any guidance on what we should expect on this matter for the full year? Hi, Adam here. I think it's clear to see that the inventory levels are going down, but both of course, from selling more productive stock, but also buying less. I think the cash flow for Q2 and the first half year shows that we are getting more productive in our stock, but also buying less. I think that is an indication also for the potential going forward, that we have started to improve the stocks to sales ratio, and that will continue throughout the year without giving an exact level indication of the cash flow for the year. We see good progress, particularly connected to the stock levels. Okay, we shouldn't expect any significant improvement in terms of total net working capital release? Is that sort of how we should read it? We think that it's gonna be a net positive effect of stock levels improving, but the quantification of it's too early to say, as it's also affecting then, of course, the operating liabilities that works against the reduced stock levels, so to say. Okay, good. Thanks. Thank you. Our next question comes from William Woods of Bernstein. William, your line is now open. Please go ahead. Hi, good afternoon. Thank you for taking the question. I've got two, if I may. The first one is on pricing into H2. How are you thinking about pricing going into the second half? What can we see that contributing? The second one is just on the Americas performance. Could you comment on the weakness in Q2 and how you're seeing that trend in Q3? It looks like markdown in the U.S. is going up quite heavily in terms of discounts. Any comments there? Thank you. When it comes to pricing, we've discussed that a lot the past quarters. We worked in a very dynamic way continuously with pricing. We're continuously monitoring each market on each product type to secure that we are the ones to offer the best value for money. And that means that we will continue to do so, of course, also in the coming quarters. Of course, potential to do certain changes in pricing to make sure that we are competitive. But this is always a balancing act, because as you also know, we're very focused on also reaching the profitability target that we've set for end 2024. And that's kind of the balancing act that we will have to manage also continuously. On the U.S., we have seen a customer sentiment weakening throughout the quarter, and I think that's a general industry trend. It's difficult to say how that will evolve. We are confident that our offer is competitive, even though the weaker trading in the market has also increased discounting from many of our competitors. It's a fiercely competitive market right now with a slightly weaker overall customer sentiment. That we're, of course, closely monitoring to ensure that we keep our position and stay relevant to the customer. Great. Our cautious comment about markdowns in the quarter is not about America as such. It's more about the late start of the spring season, so we give ourselves an opportunity to activate more if needed. Understood. Thank you. Thank you. Our next question comes from Adam Cochrane of Deutsche Bank. Adam, your line is now open. Please go ahead. Good morning. Two questions, if I may. I'll do one at a time. First one is. Thank you. O n the cost performance. Would you be able to say how much of the sort of SEK 2 billion identified cost saving program was actually achieved in this quarter? I know we originally were thinking of the second half of the year. Can you just sort of explain how much of that came into the second quarter? On the cost control above and beyond that, can you just give us some of the measures, you know, roughly, that you are taking to deliver that cost performance? Thanks. Yes, if we start with the cost program, then, I think you need to see the first half year as a whole, as there are some fluctuations between the quarter. We can see a net effect of around SEK 100 million in the first half year, attributed then to as an early delivery of the cost and efficiency program. Although it's still on time and on schedule and on size level, as we have previously indicated, it's just a timing question, then in a positive direction, amounting to roughly SEK 100 million for the first half year. You will see, to the best of our estimates, then a gradual positive impact throughout the autumn with Q3 trending in the same direction and hopefully getting the full effect towards end of Q4 and into Q1 of 2024. Overall then, when it comes to cost control, I think it's all linked to how we manage our planning, our resource planning, both in stores and in warehouses, and also still reaping the benefits of strong renegotiations with landlords throughout the last couple of years. A big driver of that efficiency in stores and warehouses comes from the improved stock to sales ratio, where we have then more effective stock that is more efficient to handle, which helps us to, although we have headwinds when it comes to salary increases, maintain operational efficiency. That's great, thank you. The second one is on price deflation. As you can see, your raw material input costs, et cetera, coming down significantly, do you think it's possible that you'll be able to see a period of price deflation where you could cut prices in 2024, but still see gross margin expansion, given the fact that your input costs and freight costs are so much lower than they were? Yes, that's that's possible. Back to what we discussed before, this is truly about balancing the fact that we take steps towards our profitability target, but also closely monitoring the competitive landscape and purchasing power to really secure that customers can come to us to get the best value for money. We're monitoring this continuously, and balancing that with taking steps towards our profitability target for end 2024. That's great. Thank you. Finally, I'd just like to say goodbye to Nils and thank him for all his help and time over the last few years. Thank you, Adam. It's been a pleasure. Thank you. Our next question comes from Warwick Okines of BNP Paribas. Warwick, your line is now open. Please go ahead. Thanks. Good afternoon, and I'll echo that as well. Two questions for me, please. The first is on inventory and markdown. With constant currency inventory down 20% at the end of Q2, why are you expecting a slightly increased cost of markdowns in Q3? That's the first question. The second is that you've talked about elevating the H&M brand. Could you just give us a sense of where you think you are with this? For example, how active is your store environment renovation at the moment? Thank you. Starting with the inventory and markdown. There are two parts to it. Even though we are pleased with the direction of the stock development, we have had a slightly postponed start of the spring selling, which means that we need to see May and June together. That's why we guide for a slightly higher activation activity now in the beginning of the quarter. Then secondly, our markdown. The cost for the markdowns are also dependent on sort of the gross margin and the in prices, which means that we'll probably sell quite a bit of the garments that were bought and had worse margins, which then affects technically the cost for the markdown for the quarter. Two effects, slightly, sort of prolonged spring, delayed summer, and then the second one is more on the technical level, where we see that the cost will increase with the higher purchase costs that we've had in the old stock, so to say. When it comes to elevating the H&M brand, we are focusing on further improving the customer offer, customer experience, and also doing a lot of work linked to supply chain. We look at customer offer, we see, for example, improvements within H&M ladies, where we can now offer a broader assortment to our customers, which is very well received. When it comes to the customer experience, we develop both digitally but also do a lot of activities when it comes to developing the physical stores and making sure that we have the optimal store network. With that comes, of course, certain closures, still when it comes to mature markets and growing in some of the newer markets, but also developing the pure formats to make sure we have the relevant format and relevant assortment, wherever we have stores. A lot of activities going on there, making sure we have relevant stores across the globe. Then when it comes to the supply chain, that has to do, of course, with assortment and precision to make sure we have the right product, at the right place in the right time. Brilliant. Thank you very much. Thank you. Our next question comes from Richard Chamberlain of RBC. Richard, your line is now open. Please go ahead. Thank you very much. I've just got one question on nearshoring, please. What percentage is it now of your sourcing, and how will that affect the effects exposures on gross margin and the buying margin? Hi, Richard. As we discussed last time, we prefer not to give any percentage, but the direction is clear. We are increasing exposure in near markets, but it's more the direction than the exact percentage, so to speak. It's part of the, what Helena talked about before, and we see we buy more in season. It's all connected, and we also see it in the inventory development. Okay, thanks, Nils. Is that concentrated in any particular area like H&M women's fashion? I mean, I know already, you know, COS gets quite a lot of product from Turkey and some, you know, more sort of quality, quick response markets. Is it particularly H&M women's fashion that you're shifting some of that more to nearshore sourcing markets? Actually, it's a broader initiative than that, touching more or less all the different business units within H&M. But looking at where we see the greatest progress right now, we can highlight H&M ladies, but that is not only because of that, but also a lot of other activities that they have been doing and investing in. Okay. Thank you very much. Thank you. Thank you. Our next question comes from Sreedhar Mahamkali from UBS. The line is now open. Please go ahead. Hi, thanks for taking my question. A couple of them, if I can, please. If I can just follow up on the North America point from earlier on, when you talked about slowing down throughout the quarter, was the exit rate still positive, or had it turned negative by the end of the quarter? How should we think about the second half in terms of the market and what you're seeing there? That's the first question, and second. Sreedhar, could you please, we take one question at a time, please. Let's start with that one. Okay. Of course. Thank you. We came out of a very, very strong quarter one for North America, and then, we see that the overall sort of sentiment has weakened and the industry is having a slightly weaker Q2 than Q1. I think we are trending as the industry as a whole, and see now when summer's arrived, we also see that the response from the customer is going in the right direction. A strong Q1, a slightly weaker Q2 for a number of reasons, but a strong response for the customer throughout the summer here. Got you. In the current trading commentary that you provided, that reflects also a rebound in North America, we assume, as well? Yeah, it's many parts that we had the rebound. I think looking at the comps from last year, we had a weaker June in many of the Central European markets. I would say that it's the European markets and Central Europe that is a slightly bigger share of the, of the current rebound. Okay, thank you. Second, question was, just in terms of the SG&A trends a little bit more broadly, please. What is the underlying inflation that you're seeing? I know you referred to wage pressure a little earlier, but OpEx actually declined in Q2, 2% in local currencies versus a 3% increase in Q1. Clearly, you've had some good contribution from the SEK 2 million savings program. Was that it, or have you seen something else going on within the SG&A trends? Thank you. I think, potentially slightly relating to the answer from before. We do see wage pressure, but we have done from operational efficiency improvements, been able to mitigate that, and mitigate it slightly more than the wage pressure, so to say. We repeat that with that, and that is based on a number of initiatives, but the primary driver is then the efficiency when it comes to the stock and the productivity of the stock. It's the product, at the end of the day, that drives profitable selling. It's very different between markets and region, how the salary inflation looks. It's not a one size for all fits all answer to it. As a general answer, our operational efficiency has been able to mitigate, wage inflation and a bit more than. Okay. Thank you. Thank you. Our next question comes from Jorg Nowicki of TextilWirtschaft. Jorg, your line is now open. Please go ahead. Good afternoon. Thank you for taking my questions. First question would be: One of the biggest margin killers in fashion online retailing is the return rate. What is the average return rate at H&M, and how did the introduction of return fees in several markets affect consumer behavior and return rates in these markets? When it comes to returns, without giving a clear figure, we know that we are on a good level if comparing with competition. We do many different activities to kind of reduce the level of returns from the beginning, such as, for example, guidance when it comes to sizing or reliability when it comes to sizing, so that customers hopefully wouldn't want to return once they have ordered. That's kind of the most important part of that agenda. We have also started to roll out a fee for sending in returns. We have covered a rather big part of Europe when it comes to non-members, also when it comes to H&M members. We are continuously rolling it out to more countries, first all within Europe. I would say that that is going rather well, but put even more emphasis on trying with other means to decrease the rate of returns. That's where the focus is. Thank you. Next question would be, you mentioned the strong performance of the portfolio brand. To me, that means that your main brand, H&M, is not growing. Why is that, and what measures do you take in order to grow again? Looking into the quarter and, rightly so, that the portfolio brands have done well looking into the quarter. Looking into H&M, we also see that on rather big markets, we've had a delay of the summer season start due to the weather, so that has hit since it's on big markets. On the other hand, we see that we can capture parts of that then in June once the warmer weather has arrived. That has been on rather big markets within Central Europe and also North America. North America, of course, as Adam said earlier, we've also seen reduced purchasing power with our customer groups. Mainly it's related to these countries and regions. Mm. Okay, Okay, thank you. My last question would be, how is H&M doing in your biggest market, Germany, right now, or in the first two quarters and the beginning of the third? We're doing well, thank you. It's, as you said, the most important market for us, together with the U.S. As Helena and Adam said, it was a slightly delayed start of the summer season, but have picked up well in June. Okay. Thanks. Are there any further questions? My apologies. As a reminder, if you'd like to ask a question during the Q&A session, please register via the link in the confirmation email. Our next question for today comes from Nick Coulter of Citigroup. Nick, your line is now open. Please go ahead. Hi, good afternoon. Thank you for taking my questions. I'll stick to two, and go one at a time, if I may. Firstly, to come back on the cost efficiencies falling outside of the SEK 2 billion program that you have in place. To Frieda's point, there does look to have been a step change in your underlying SG&A profile, in the second quarter. Is it possible just to flesh out what's changed between the first and second quarters, and how we should think about that going forward? Should we use Q2 as a base in terms of your SG&A efficiency? That's the first one. Thank you. What will remain is the efficiency potential that comes from a higher productivity in our assortment and our stock, and that will remain. I think that is the clearest distinction that we can see throughout the spring. It's not that end of Q1 was bad, and then all of a sudden, start of Q1 was good. It's a gradual improvement that we have been planning for and now executing on. I think it's wise to see it as a half year totality, but with a strong direction that we step by step, take the steps needed to reach the long-term targets. Those efficiencies outside of the SEK 2 billion program should continue to improve for the balance of the year. That there's a trajectory of improvement, excluding the SEK 2 billion, from what you're saying? Yeah, the SEK 2 billion are more related, even though it's not only visible in the administration role, so to say, in the income statement. There are also, of course, other efficiency potentials throughout the cost structure, and the majority of them are then based on having a strong assortment with high productivity in our stock. Right now, we have a good trajectory, ensuring that the quality of the inventory is good and that we were able to turn that over in an effective and efficient way then. Of course, as I mentioned before, that we will have and continue to have some wage inflation, headwind that we continuously, of course, work to mitigate as well as we can without compromising the customer experience. Thank you very much. Secondly, if I may, just on the Nordics, it looks to be quite a strong underlying performance. If you're able to call out why that might have been a positive outlier, please. Happy to see that the all brands are doing well. What is exceptionally well in this quarter, particularly for the Nordics and Sweden, is the growth of Sellpy. That is one sort of distinct difference that we see, where Sellpy has become a big part of Swedish retail and a strong leader when it comes to recommerce. Are you doing anything different with respect to your merchandising or how you're looking at the store ambiance? Is there anything that you're introducing in the Nordics first? No, generally not. They have come far when it comes to implementation of the whole omni-operational model and so forth. It's not something distinctly different. It's just that they have as well as Central Europe, they've been part of our development for a long time, and we can see positive effects of it. Brilliant. Thanks so much, and of course, best of luck to Nils. Thank you. Thank you, Nick. Thank you. Our next question for today comes from Simon Irwin of Credit Suisse. Simon, your line is now open. Please go ahead. Hi. Thanks for taking my call. The question, can you just talk a bit about the lease interest charge? I know it's not an enormous number, but it's gone up from being sub SEK 200 a quarter to kind of SEK 300, and now SEK 400 a quarter. What's going on there in terms of the kind of way that your IFRS accounting is going? Because presumably, your overall kind of lease liabilities aren't increasing. Can you just talk us through what we should expect on that front? You're right. I mean, there is an interest component to the lease liabilities. Of course, with interest rates changing, that affects the interest cost also in the income statement. Difficult to say how much the interest rates will continue to shift. Right now it feels that we have reached some kind of peak of the increase, so to say, or at least a decline of the interest rate increase. We hope that this will be a more normalization of the interest rate cost connected to IFRS going forward. Right. Thank you. Can you just talk a little bit, particularly around the admin expense line in particular, which was look very elevated in 1Q, and then looked remarkably low in 2Q, when historically it's been around 2.5%. you know, is there a big shift in terms of some of the, some of the numbers within that expense line between the two quarters? There are always sort of timing and phasing effects, and it's whether we sort of have some of the big invoicing done before the end of the fiscal year, or if it's taken the beginning of the next, so to say. That affected Q1. I think the best sort of indicator of the direction is to see the two quarters as a whole then. With, of course, still being committed to the overall size and timing of the efficiency program. As I mentioned before, it will gradually become more visible throughout the autumn. Will the efficiency program, the SEK 2 billion, will that be kind of over-indexed within that line? It's obviously SEK 2 billion. Within the admin line is quite a large number. Exactly. It will be a split. As we have this sort of function based income statement, it will not only be visible in the admin role, it will be like a 30%, 30%, 40% split, and with around 40% of it visible in the admin role. Great. The rest in COGS and sales. Yeah. Okay. Thank you very much indeed. Nils, good luck, and thank you very much. Thank you. Thank you, Simon. Thank you. Our next question comes from Georgina Johanan from JP Morgan. Georgina, your line is now open. Please go ahead. Hi. Thanks for taking my question. I've got three, please, I'll ask them one at a time. Just on the first one, appreciate that you're not explicitly guiding on pricing from here, but just to understand directionally in the second half of the year, should there still be some year-on-year benefit to gross margin as price increases, either land or annualized, please? That was my first question. Okay. Looking into the external factors impact on purchasing prices, as we've discussed before, we see that it's gradually being improved. Of course, that means that we have the opportunity also to look into pricing continuously to really make sure that we are the ones to have the best customer offer and value for money on all the important product types. We're reviewing that product type per product type on each of the different markets. Again, I would like to put emphasis on, of course, there is a potential to then reduce some of the prices to make sure that we're really competitive, but also we're always keeping track on us, also taking steps towards the very important profitability target that we have for 2024. Thank you. My second question was just following on from Simon's question on the interest expense. I note that the sort of D&A portion of the lease charge, or rather the lease portion of the D&A charge, has also moved up materially in the half by about, I think it's about 9% or so, which seems a large increase in the context of a reducing store base. Is that purely accounting as well, or is there something else going on there, please, in terms of the rent charges? No, there's not something else going on, and it's connected to interest rates increasing and currency translation. Great. Thank you. Just a quick question on energy costs, because I think for the last couple of quarters, you've called out the drag. Are you able to quantify the impact in this quarter, please? Was it still a year-on-year drag in Q2? Yes, it was a year-on-year drag. We've seen that the increased cost have sort of eased and then come down. It's not a majority share of the cost difference in this quarter, as it's been over the last two quarters previously. Still a drag, but not as severe as previous half year. Great. Thank you very much. Thank you. Thank you. Our next question comes from Dana Telsey from Telsey Advisory Group. Dana, your line is now open. Please go ahead. Hi. Hi, good afternoon, everyone. Hi. As you think about the physical real estate. Hi. As you think about the physical real estate footprint, how are you thinking about size of stores, number of doors? Is it differing by geography? Are lease negotiations more favorable in one region of the world than another? Just one other thing in that, how is omni-channel advancing within your physical footprint? Nils, you'll be next. Thank you. Thank you, Dana. Okay, looking into optimizing the store portfolio, first of all, we see that the physical stores are very, very important still for our customers. It's accessible. It's a way for our customers to get inspiration to try out clothes. More importantly, it's kind of the combination that we always talk about on digital channels and physical channels and how those can strengthen each other. We're working on optimizing the store portfolio in many different ways. Of course, as digital has expanded when it comes to shopping behavior, we have, as you know, also reduced the number of stores in certain mature markets. Looking at the pace of that decline, of course, more and more we're coming into more optimal levels. We also see the opportunity to increase number of stores in parts of the world as well. Looking into how to differentiate the stores, that is a very important topic and also an important part of our plan and also investments moving forward, because it's all about having the right store format and thereby also the right size at the right place. Looking into the customer group around each and every store, we are also profiling the stores in different ways, with having the relevant assortment for that customer group. Also looking into space and interior and doing that according to the different store formats that we have developed. That is a very important part of the plan. Refurbishment is, of course, part of that as well. You had one question in the end about omni. Not sure if I answered that. Could you please ask again? Of course. As you think about omni-channel and the advancements that you're doing within the physical store footprint, what are you putting in there? How are you reacting, and did you put something that you changed? Is there advancement there? It's part of the different store formats. That's also to think about omni, how to make it seamless between digital and physical channels. For example, if you want to buy something online and pick it up in store and how to further advance that, we, of course, do self-service checkout continuously. We do a lot of work on helping customers to navigate better in our stores. There's a lot of different activities that is kind of integrated in the different store formats, all to make the whole experience more omni and more convenient. That is a very important part of integrating the channels. Thank you. Our next question comes from Anne Critchlow of Societe Generale. Anne, your line is now open. Please go ahead. Thank you. Good afternoon, everyone. I've just got one question, please. Thinking about the gross margin, is it fair to say that FX could still be a negative impact in the third quarter, and then more neutral in the fourth quarter, but not really positive until the first half next year? As we said, we don't guide on the gross margin, but we do help you with the external factors that are, you know, important for the input costs. As we said in the report, they are now reversing and becoming from having been very negative and gradually improving, and now, they're pivoting and becoming a positive sometime in the third quarter, probably. We're going for neutral, more or less, for the quarter on the impact. The gross margin could be something else, of course. For the fourth quarter, it looks even more, then it's very much a tailwind for the input costs. Thank you very much, Nils, and good luck for the future. Thank you. Thank you. Our next question comes from Paul Rossington of HSBC. Paul, your line is now open. Please go ahead. Good afternoon. It's probably a somewhat boring question, to be honest, but you still have a significant amount of undrawn credit facilities. Other than the maturity profile of those credit facilities, is there any other reason why you now need them? That's my question. Also just to say thank you very much to Nils, for all of your help. Thank you. Thank you, Paul. No, we make sure that we have a strong liquidity and a healthy sort of access to cash. We believe that given the last couple of years, we are right now on a level where we can be sort of absorbing dents, and that gives us the sort of opportunity to look forward and build for the future, to say, given a robust financial situation. Thank you. Thank you. At this time, we currently have no further questions. I'll hand back to Helena Helmersson for any further remarks. Before we finish, of course, I'd like to say a big, big thank you to Nils Vinge, since this is your last report with H&M Group. You are such an appreciated leader and colleague within H&M Group, and have been a key person, both in the current position, of course, but also in many other positions. A big, big thank you to you and best of luck. Thank you, Helena, and also thank you to the audience. It's been a pleasure working with you, and best of luck to all of you. Well, I'd also like to introduce then our new Head of Investor Relations, which is Joseph Ahlberg. A warm welcome to you, and from the next quarter, you will be the one that will lead the investor relations. Thank you. I'm very excited about the opportunity and look forward to working closely with you all and continue the very strong collaboration Nils has had with all of you. By that, a big thank you to all of you who's been participating. Have a lovely summer and a very good day. Thank you. Thank you for joining today's call. You may now disconnect your line.