Good morning, and thank you for standing by. Welcome to Birkenstock's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. The company has asked that you please limit yourself to one question and return to the queue for any follow-up. The company has allocated 60 minutes in total to this conference call. I would like to remind everyone that this conference call is being recorded. I will now turn over the call to Megan Kulick, Director of Investor Relations. Hello, and thank you, everyone, for joining us today. On the call are Oliver Reichert, Director of Birkenstock Holding PLC and Chief Executive Officer of the Birkenstock Group, and Ivica Krolo, Chief Financial Officer of the Birkenstock Group. David Kahan, President of Americas, Nico Bouyakhf, President of EMEA, and Alexander Hoff, Vice President of Global Finance, will join us for the Q&A. Today, we are reporting the financial results for our fiscal second quarter of 2025 ending March 31, 2025. You may find the press release and supplemental presentation connected to today's discussion on our Investor Relations website at birkenstock-holding.com. We would like to remind you that some of the information during this call is forward-looking and, accordingly, is subject to the safe harbor provision of the federal securities law. These statements are subject to various risks, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as in our filings with the SEC, which can be found on our website at birkenstock-holding.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. We will reference certain non-IFRS financial information. We use non-IFRS measures as we believe they represent the operational performance and underlying results of our business more accurately. The presentation of this non-IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS. Reconciliations of IFRS to non-IFRS measures can be found in this morning's press release and in our SEC filings. With that, I'll turn the call over to Oliver. Good morning, everybody, and thank you for joining us. We are meeting today at a moment when the world seems unpredictable. The current context is a stress test for the resilience of business models. As our results for the second quarter show, we have passed this test very well. Our company is in good shape, and we are confident about our future. Our performance is rooted in the power of a universal, purpose-driven brand that stood the test of time. We control our own supply chain with 95% of our products made in Germany and 100% made in Europe, and 96% of our raw materials sourced in Europe. This helps shield our business from the current disruptions. Once again, we're delivering on the promises we made during our IPO. In the second quarter, we delivered a record EUR 574 million in revenues. On a reported basis, this was up 19% year-over-year. In constant currency, revenue grew by 18% above the high end of our 15%-17% target for the full year. Revenue growth was driven by a double-digit volume increase, supported by continued ASP growth. The manufacturing capacity we have added over the past two years has allowed us to increase our production to meet the increasing demand for Birkenstock. Sales numbers for our five iconic silhouettes grew double-digit, contributing to both volume and ASP growth. At the same time, we continue to tap into the white spaces, which are, as you know, Klaus Baumann, our own retail stores, and the APAC region, all of which contributed to our strong growth. As expected, growth in the second quarter was balanced between our B2B and D2C channels, with B2B coming in at 18% and D2C at 17%. The D2C growth was driven by our investments in our online and own retail stores. Our membership base reached over 10 million loyal members, up over 25% year-over-year. We are on track with our retail expansion, with now 77 owned stores, adding six new doors during the second quarter. As shared, we are heading towards 100 owned stores by the end of this fiscal year, and we are confident we will get there. During the quarter, revenue from Klaus Baumann grew at twice the rate of the overall group and increased share of business by 400 basis points. Demand for Klaus Baumann for spring/summer 2025 was up strong double digits, and we see continued strength as we build our order book for spring/summer 2026. Almost half of our top 20 selling silhouettes in the quarter were Klaus Baumann. Let us now have a brief look at the segment performance. Within our largest segment, the Americas, we experienced continued strong consumer demand for our brand. Revenue in the region was up 23% in reported currency and 20% in constant currency compared to the second quarter of 2024. Both the B2B and the D2C channel grew double-digit. Within the B2B channel, the fastest growth came from our youth, sporting goods, outdoor, and department store partners. Americas D2C strengthened in the quarter from investments we made in the digital channel and from our expanded physical retail presence. We opened one new door in Nashville, bringing our own store count in the region to 10. In EMEA, we delivered double-digit growth of 12%. In the recently integrated Middle East/Africa area, we have been taking further actions to be more focused in our growth. D2C remained very strong, outpacing B2B growth by one and a half times. Within our D2C channel, shoes are the second biggest category behind classic leather, showcasing the continued momentum in this important area. We increased our brand presence and awareness with the opening of new stores in London and Paris, bringing our store count in EMEA to 37. We created some strong brand moments, bringing our mission to life across the region. One highlight was an experimental pop-up store in Les Deux Alpes in France, where we hosted over 3,000 brand fans and members in a month. The APAC region was again the fastest growing segment in the quarter. Our largest white space region grew by 30%, driven by very strong growth in our D2C channel. We opened three new owned retail stores in India, Japan, and China, bringing the total number of stores in the region to 30. We also expanded our strategic partnerships, increasing our monobrand partner doors by 20%, driving very strong double-digit growth in our B2B channel. Consistent with the other segments, Klaus Baumann and higher-priced premium leather executions are growing faster than the regional average and contributing to positive ASP growth in the region. Our three top markets in terms of revenue were Australia, China, and Japan. All grew significantly above segment average, with China more than doubling in revenue year-over-year. As a reminder, we are just beginning to enter Greater China in a meaningful way and see the opportunity for continued strong growth in this market. The strong results make us confident for our important spring/summer selling season, as we are seeing great momentum across all product channels, categories, and segments. I will now turn it over to Ivica to discuss our financial results in more detail. Thanks, Oliver. I'm happy to share with you Birkenstock's performance for the second quarter of 2025, which came in ahead of our expectations. Second quarter revenues were EUR 574 million, with growth of 19% on a reported and 18% in constant currency, above the high end of our 15%-17% annual guidance for the year. As expected, growth in B2B and D2C were balanced in the quarter, with B2B up 19%, 18% in constant currency, and D2C up 19%, 17% in constant currency. D2C share of business was 24%, equal to the prior year. As a reminder, the second quarter is seasonally our heaviest in terms of B2B mix, given the timing of the sell-in to our partners for the spring/summer season. Gross margin for the quarter was 57.7%, up 140 basis points year-over-year. Better absorption of costs related to a new manufacturing facility contributed about 50 basis points. The remainder is made up by selected price adjustments, net of higher input costs, and favorable currency translation. Selling and distribution expenditures were EUR 127 million in the second quarter, representing 22% of revenue, down 150 basis points from the prior year, mainly due to the reclassification of expenses into G&A previously recorded in S&D. General administration expenses were EUR 32 million, or 5.6% of revenue in the quarter, up 150 basis points year-over-year due to the reclassification, as well as higher IT expenses primarily related to the ERP conversion in the Americas. Adjusted EBITDA in the second quarter of EUR 200 million was up 23% year-over-year, and margin of 34.8% was up 110 basis points year-over-year. This was primarily due to the improvement of gross profit margin and the favorable currency translation, partially offset by the higher G&A. Adjusted net profit of EUR 103 million in the second quarter was up 33% year-over-year, and adjusted EPS was EUR 0.55, up from EUR 0.41 from a year ago. Cash flows used in operating activities during the second quarter were EUR 18 million, down from EUR 68 million compared to last year due to the timing of tax payments relating to prior years. We ended the quarter with cash and cash equivalents of EUR 235 million. We continued to proactively manage working capital, and we improved our inventory-to-sales ratio to 36%, down from 40% in Q2 2024, and our DSO for the quarter was 46%, in line with 44% a year ago. During the quarter, we spent approximately EUR 21 million in capital expenditures, adding to our production capacity in Palseberg, Görlitz, and Aruka, and continuing our investments in retail and IT. We are on track to meet our CapEx targets of around EUR 80 million for the year. Our net leverage was 1.8 times as of March 31, 2025, down slightly from 1.9 at the end of Q1. As is typical, we expect to see positive operating cash flow contribution in Q3 and Q4 due to the seasonality of our working capital. As we look forward to the remainder of fiscal 2025, we believe we are well positioned to meet or exceed our stated growth and profitability objectives. Birkenstock is less exposed to tariffs, with 100% of our production and 96% of our materials sourced from Europe and no contract manufacturing from Asia. We already have taken appropriate actions to mitigate the impact on tariffs, both near-term and long-term. We have multiple levers to pull and are in a strong position with experience in managing inflationary pressures, including tariffs. First, the consistency in demand, together with our ingenious distribution and scarcity model, allows for pricing flexibility. For a full offset of tariff impact, we would need only a low single-digit price increase globally, which is consistent with our historical level of pricing actions. Pricing is not the only lever we have, though. Given our vertical integration, additional levers include efficiencies in production, vendor negotiations, the optimization of product mix, and the allocation of products between the different regions. This, together with our strong inventory position, gives us the confidence that we can mitigate the fiscal 2025 tariff impact. While FX was a benefit to us in the first half of the year, the recent depreciation in the dollar will create a headwind to our reported growth and margins in the third and fourth quarter. Despite the tariff and FX headwinds we face in the second half, we are confident that we will be able to meet or beat our financial targets for fiscal year 2025. Based on the results to date and the current trends we are seeing in the business, we now expect to be at the high end of our constant currency revenue growth guidance of 15%-17%. More importantly, provided we do not see any further weakening of the dollar and no additional tariffs on imports from the EU to the U.S., we now expect adjusted EBITDA margin of 31.3%-31.8%, 50 basis points above our previous guidance. This implies an adjusted EBITDA target in the range of EUR 660 million-EUR 670 million, up 19%-21% year-over-year. Now I'll be handing back to Oliver. Thanks, Ivica. The first half results of our fiscal 2025 demonstrate the strength of our brand with strong double-digit revenue growth, excellent margins, and significant progress in our white space growth initiatives. We expect that the tariff situation may create a unique shift in consumer behavior in the footwear category, with a split between the few brands like Birkenstock, who manage strong brand equity through relative scarcity, and those who distribute their products with less discipline and pricing integrity. We will navigate through these uncertain times from a position of strength, as we have successfully done in the past. Think about COVID, where we came through the challenge stronger than before. Do not forget about the import tariffs previously imposed by the U.S. administration, which we completely absorbed without any loss of sales. That is why I am confident today. Our decades-long track record of managing our brand through a consistent ingenious distribution strategy puts Birkenstock in a strong position to take additional shelf space and gain share. We are a brand with industry-leading growth, pricing power, clean inventories, strong profitability, global reach, a very healthy balance sheet, and cash generation. We believe there are a few consumer companies better positioned today to drive steady long-term growth and shareholder returns. I would now kindly ask the operator to open our Q&A session. Thank you. Thank you. At this time, we will be conducting a question-and-answer session. As a reminder, the company has asked that you please limit yourself to one question and return to the queue for any follow-up. The company has allocated 60 minutes in total to this conference call. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull for questions. The first question today is coming from Matthew Boss from JPMorgan. Matthew, your line is live. Great. Thanks. Congrats on another really nice quarter. Thanks, Matt. Oliver, could you speak to your confidence in your outlook for the rest of the year and your raised EBITDA margin guidance, despite the elevated macro uncertainty with tariffs and foreign exchange? Really, what are you seeing in your current business to give you this confidence? Good morning, Matt. Thank you for your question. Let me tell you one thing. For us, the whole situation is an opportunity and not a risk. Be assured we will fully offset the effect of the existing tariffs. We are aware the currency is moving around quite a bit, but as always, we will share FX impact with full visibility. Of course, we have factored the current FX level into our margin outlook. Most importantly, we and our partners are not seeing any changes to consumer behavior and demand out there. When it comes to product and to our product, there's no change at all. Full price realization remains at 90+%, and our order book from wholesalers remains very, very strong without any cancellations. I think that's the ultimate test of truth to undermine the strength of the brand and pricing power. We are well positioned to take shelf space, and we could speed up, of course, our retail expansion if we have an opportunity. Wow. It's great color. Best of luck. Thanks, Oliver. Matt, maybe to add on your question with regards to EBITDA margin, as compared to our original guidance, it's two drivers for that. Mostly, it is coming from gross margin improvement, from first, better absorption, and then second, pricing net of inflations, which are the two key drivers for improved EBITDA margin over the course of this year. Great. Thanks for the color. Thank you. The next question will be from Simeon Siegel from BMO. Simeon, your line is live. Thanks. Hey, everyone. Really nice ongoing broad-based strength. Nice to see. To follow up a little bit, just among everything else, the DTC in Americas strength is really great, likely encouraging to many investors. Could you just speak to the implied top-line deceleration in the back half, which I think looks a little bit below the 1H performance? Gross margin was nicely better, and really great to see the ongoing improvement from the Pasewalk ramp. How should we think about the progression of gross margin going forward? Maybe add any color there from just, again, stripping out FX, to your point, any remaining Pasewalk implications versus just the underlying gross margin dynamics. Thanks, guys. Thanks, Simeon and Simea. As you know, with our B2B, we have an order book which provides us with great visibility in terms of growth. As you also know, the second half is more DTC-heavy compared to the first half of the fiscal year. We have naturally less visibility as a result of that. Given the current macro conditions, we are, as you are aware, prudent in our planning given this reduced visibility in the second half. In terms of cadence or seasonality, the third quarter, as is typical, will be the slowest growth quarter for the year. The first reason is just simple mathematics. The sandals share is the heaviest in the third quarter. While sandals are growing double-digit, closed-toe shoes grow two times as fast. The weighted growth is slowest in the third quarter in the fiscal year. This covers the first part of your question. The second question on gross margin comes back to my initial statement. We had expected about 50 basis points tailwind to gross margin for the full fiscal year 2025 through better absorption, primarily, however, in the second quarter of the year. Now we are seeing 50 basis points into Q, so we are already slightly ahead of schedule. We now think that we will be about 75 basis points, which will be the benefit for 2025, with the remainder coming in in the fiscal year 2026. As mentioned earlier, this will be driving the improved gross margin. That's great. Thanks, guys. Best of luck for the year ahead. The next question will be from Mark Altschwager from Baird. Mark, your line is live. Thanks for taking my question and great results. Could you expand more on your plans for tariff mitigation and the impact on demand for Birkenstock? Relatedly, could you just speak to the timing, any callouts on the timing of when you expect the costs and the offsets to flow through the P&L? Thank you. Thank you, Mark. It's Ivica speaking. Yes, sure. Most importantly, and as Oliver already mentioned, we will fully offset the existing 2025 tariff impact. As you know, we are a brand with a broad heritage being made in Europe. As such, we are less exposed than most. Ninety-six percent of our raw materials, 96% of our raw materials are sourced from within Europe, and 100% of our manufacturing and final assembly is from the EU. That said, we will offset the tariff impact. First, we will look at global pricing. As you know, we have a goal to maintain global pricing architecture, and the tariffs in the U.S. will not change that. We are in a position where we have pricing flexibility without impact on consumer demand, which is very consistent. As we have also a 90%+ full price realization given the brand equity that we've not only built in the U.S., but also beyond. Second, unlike our competitors, we are vertically integrated. We have other levers to pull, mainly the ability to gain efficiencies across our value chain. Overall, in an environment where consumers face pressure from inflation in many areas, we expect to see even more intentional purchasing and a shift between the brands in high demand, like we are, and those brands that are struggling really to gain consumer attention. As such, referring back to what Oliver has said, we do see this indeed as an opportunity to take additional shelf space and gain share eventually. Best of luck. Thank you. Thank you. The next question will be from Dana Telsey from Telsey Group. Dana, your line is live. Hi. Good morning, everyone, and nice to see the progress. As you think of some of the gross margin drivers, particularly on the fact of the ability to better absorb the new manufacturing capacity added in September 2023, where are we on that journey? When does it get fully absorbed? When you talk about the sales price adjustments between closed-toe sandals, what are you doing in terms of pricing to continue to generate this solid gross margin? Thank you. Hi, Dana. It's on the first part of your question with regards to better absorption. As initially mentioned, we had expected about 50 basis points tailwind to gross margin for this full year. We are now seeing that materializing ahead of schedule. We now think it will be 75 basis points for this fiscal year. The overall effect for next year will be additional 75 basis points. That will be clearly a driver for gross margin improvement. Got it. And then just on the retail store rollout, I think Nashville opened this past quarter. How are the new stores rolling out? Is the number of new store openings still the same around the world for your own stores? And any learnings of closed-toe versus sandals from the stores? Thank you. Hi, Dana. This is Nico. I'm going to take this question. As you know, retail is a massive growth pillar for us, and we are very pleased to see that we are currently operating 77 stores. We added six stores in this quarter. We opened in less than a year Paris No. 2, which is doing really well. We opened London No. 3. We opened in Nashville, and we opened also in Shanghai. It's worth mentioning that we don't need that long ramp-up period for those stores. It takes a couple of weeks, and then they are top five, top seven, top eight, or top ten stores from a performance perspective. We remain very disciplined in choosing the right locations. For us, the locations are really mattering the most. We really want to be sure that the financials are right, that the economics is right, and the location is also providing the best consumer experience. We said that we're going to come closer to 100 stores at the end of this fiscal year and closer to 150 stores at the end of 2027. We are well on track with the store expansion around the new stores. I think it's worth mentioning while we open stores, the retail growth is not just driven by store expansion. We have a very solid and healthy comp growth in our longer-standing stores. Thank you. Thank you. As a reminder, the company has asked that you limit yourself to one question and return to the queue for any follow-up on today's call. The next question is coming from Laurent Vasilescu from BNP Paribas. Oh, good morning. Thank you very much. Good morning. Thank you very much for taking my question. Closed-toe increased its mixed rate by 500 basis points in 1H. Is that driven by the Boston as well as other closed-toe offering? Should we assume a similar rate increase of 500 basis points for the second half? Separately, by my math, it looks like the sandal assortment grew low teens in Q2. Should we assume the sandal business grows low double digits for FY2025 similar to last year? Thank you. Hi, this is Nico. Thank you for your question. I'm going to take it. Closed-toe, as you just mentioned, continues to outpace our open-toe this quarter by 2X. It is worth mentioning while this is an outpacing of our open-toe, our open-toe business grows double-digit. We are really pleased to see that this is not only driven by Boston. Boston continues to show a very strong performance while all non-Boston clogs are growing at the same pace. We are really diversifying our clogs business, and that can also take some pressure off the Boston. When it comes to lace-up shoes, like really shoe shoes, this category delivered another record quarter, significantly outgrowing our clogs business. We are diversifying our closed-toe business beyond Boston and beyond clogs. EMEA, just to reference one thing from EMEA, it is already the second biggest category in our online channel. Seven out of top 20 are lace-up shoes. That all again while sandals are growing double digit. Thank you very much. Best of luck. Thank you. The next question will be from Paul Lajoie from Citigroup. Paul, your line is live. Hi, this is Kelly on for Paul. Thanks for taking our question. Just want to follow up on some of the gross margin post intakes. I think last quarter you said gross margin would approach 60% this year, I guess, with the raise in the Passivac ramp contribution, but maybe some FX hybrid. Just curious if you're sort of reiterating that guide, if you're raising it. Any color there. Secondly, on the pricing strategy, you took around the price increases in the second quarter. Is that to offset the tariffs, or should we expect more from here? Any regional color on where those price increases are focused. Thank you. Hi, it's Ivica speaking. Thank you for your question. On gross margin, there will be two drivers. We will have and we will see better absorption in our facility in Pasewalk. This is the one factor driving that, which is 50 basis points in Q2. We also experienced favorable FX and pricing effects net of inflation, which also contributed to the increase of 140 basis points in Q2. Generally on pricing, and as mentioned, we're taking a global approach here as we have done in the past, frankly. Every season we're reviewing prices on a style by style basis. We are very surgical when it comes to pricing, however, always maintaining a globally aligned pricing architecture. Thank you. Thank you. The next question will be from Jay Sole from UBS. Jay, your line is live. Great. Thank you so much. Just a question. How are you thinking about cash flow and cash flow uses in the back half of the year? As you get into the year, obviously, the company has a lot of cash in the balance sheet. How do you feel about the plans for that cash? Thank you. Hi, Jay. It's Ivica again. We've always said that our first priority for use of cash is to invest in the business and especially in the white space opportunities that we have identified, and Oliver has already touched on it. We expect to invest about EUR 80 million in CapEx for this year, and that will continue in future years. This quarter, we invested EUR 21 million, and this is predominantly in our production facilities in Görlitz, Pasewalk, but also in Aruka, and also to support our retail expansion. We've also said that we would like to continue to reduce our debt, and we will continue to do that. We are fortunate that even after these two priorities, we have additional optionality and discretionary cash available. As such, we are always evaluating the options for the use of cash and, of course, including the possibility of share repurchases. Okay. Thank you so much. Thank you. The next question will be from Lorraine Hutchinson from Bank of America. Lorraine, your line is live. Thank you. Good morning. You've called out a trend over the past few quarters of a younger customer trending more toward in-person shopping. Have you seen that build continue? Is that a global phenomenon or more focused on North America? Yeah. Hi, it's David. Certainly, the phenomenon seems to be global. I just think that youth tend to shop more live. I also think that our brand, because of the tactile shopping experience of coming into contact with Birkenstock, especially for new consumers the first time, it's a very real experience in our own retail, and I think that's going to continue. Thank you. The next question will be from Sam Poser from Williams Trading. Sam, your line is live. Thank you for taking my questions. I'm wondering on the demand side in the back half of the year, once the impact of the tariff kicks in on other things, how much of it from a demand perspective may you have tempered your outlook from a unit perspective or something given that? Since you run, what% is your scarcity of the demand right now? Is that what gives you the comfort that you're scarce enough that it won't impact the sales? Are you going to say that you're running at 75% of the demand? Is that going to just leak up to 80%, but you'll still be scarce, and that's why you're not concerned with the top line? Sam, hey, it's David. Great question. As you know, we always manage with what we call relative scarcity. It would be a little hard to say what we think the percentage of relative scarcity is. Having said that, based on the demand, based on the momentum, we find that every time our sales increase and we put a little bit more stock into the market, we see the top line demand continue to increase. I think we're not being cavalier about the fact that consumers might be a little pinched in the wallet, but we see this shift to the products and the brands that are most in demand. We don't see any impact to the demand we currently see. I think that's a strong statement that we're not going to ever compromise that balance of stock to sales in the marketplaces around the world. Thanks. Ivica, can you just break out? Can you give us just some general thoughts on what the gross margin for the full year is going to be and how you're thinking about SG&A in total for the full year? I think, yes, sure. It's Ivica speaking. On gross margin, as mentioned, the key driver will be the additional absorption that we are seeing, but also pricing, net of inflationary effects, and this will drive the increased gross margin. We said that we will be moving closer to the 60% gross margin target, and this is what we are reiterating. On the SG&A side, we are going to continuously invest in infrastructure, in IT, and as such, we want to have leg space here to continue and to make the organization future-proof to cope with the growth that we are experiencing and the demand that we are seeing outside. Also be aware in terms of selling and distribution expenses that we are continuing to invest in retail, and this is certainly also driving additional selling and distribution expenses. I guess just real quick, I mean, for the first half of the year, you grew your. Sam. It's Megan. That's three questions. We're going to have to move on. I'm sorry. All right. Bye-bye. All right. Thank you. The next question is coming from Michael Benetti from Evercore. Michael, your line is live. Thanks, guys, for taking our question. This is Jesalyn on behalf of Michael. Congrats on a good set of results. Maybe just a little bit on the other markets. Oliver called out white space in APAC growth and China more than doubled in the quarter. Maybe talk about the opportunity there and what is the long-term stock growth plan for the region. On EMEA, there was a little bit of slowdown second quarter. How should we think about second half growth? Any color there will be helpful. Thank you. Hi, Jocelyn. This is Nico. I'm going to touch on the EMEA question. In EMEA, please let me share that Q2 of this year is built on a very strong quarter in last year. We did some land grab in B2B last year, and simultaneously, we had a very, very strong DTC performance. We saw across our EMEA countries a broad-based growth, specifically in our DTC channel, which grew 1.5X faster than our B2B channel. Our overall sell-through rate at Strategic Wholesale Partners is very healthy, and we have a very healthy inventory-to-sales ratio. As you know, we integrated Middle East and Africa together with Europe into one EMEA segment. We took the opportunity to visit the Middle East and Africa markets and have started to take some right-sizing actions of the business, specifically in the North African business with our distributors. These actions will ensure a focused and also high-quality growth in the future. We are really protecting the quality of our distribution there. Let me also share that Q2 is really the highest B2B shipping quarter. You are really faced with a full order book, you just sometimes face operational limitations in getting the product out across the quarter. That is a bit more color for EMEA. Hello, and this is Klaus talking about the APAC region. We had another very strong season in APAC. D2C was strongly outpacing the B2B part. We are seeing a very strong increase in our traffic, not only online, also in the stores. By keeping also our conversion rate, there is a very positive feedback coming also on the sellout on our new stores. Same on the like-for-like business. We are seeing a double-digit growth in the comparable stores. In the product sellouts and development, we see similarities to the other markets. We are selling more high-priced products and getting all our icon products also running. Same for the closed-toe shoe business, also slowly growing in the APAC region. We are very confident for what is coming. Great. Thanks, guys. Thank you. The next question will be from Edouard Aubin from Morgan Stanley. Edouard, your line is live. Yeah. Hi, guys. Ivica, just a clarification. Are we right in thinking that most of the inventory you're going to be selling in the U.S. in fiscal 2025 was kind of shipped before the tariff announcement? Therefore, the tariff news and also the effects from a transactional standpoint should have kind of little impact on your fiscal 2025. Just wanted to have some clarification. Kind of related to that, can you just give us a hypothetical growth? I know you have mitigating factor, but can you give us a gross impact on the effects? Let's say the U.S. depreciates 10% versus the euro. What's kind of the impact on your EBIT, hypothetically? Thank you so much. Hi, everyone. It's Ivica speaking. To your first question on the inventory, we have a strong inventory position, not only in the U.S., but also globally. Certainly, this inventory position in the U.S. is helping us to fully offset the 2025 adverse effects from increased tariffs. Ivica, so we should understand it's mostly an FY26 event rather than an FY25 event, basically, in terms of impact. Hey, Edouard. This is Alexander speaking. Yeah. There's always some fluctuation in currency. We also commented on that earlier. Clearly, we saw some tailwind in the first half of the year. With the current FX rate, we see a little bit of headwind for the remainder of the year if the FX rate stays where it is. Simulating this with the current rate, we will, at a full year, be exactly on 2024 rate. This should not be, at a full year, an impact to us. To simulate it a little bit, full year, approximately $0.05 change in the US dollar exchange rate will give you EUR 37 million of revenue impact and EUR 26 million of EBITDA impact. This should be a good math to model out. Okay. Understood. Thank you. Thank you. The next question will be from Anna Andreeva from Piper Sandler. Anna, your line is live. Great. Thank you so much. Good morning. Let me add my congrats as well. You mentioned a strong trend in the business and Q2 being seasonally the slowest growth quarter, just given the sandals. Just curious, any additional color you could share on what you're seeing in April and in May? Curious how the closed-toe is performing. Are you seeing any signs of pull forward in demand ahead of the tariffs, rather, in the U.S.? We see no change in demand, its sell-through results through the quarter that we're referencing. Whether or not there's requests for pull forward, we manage that ourselves. We make the decisions. Right now, the flow of inventory is always managed by us relative to stock-to-sales ratios. We do not do anything from an inventory standpoint in shipments based on anything that has to do with any tariff impact whatsoever. Anna, it's Megan. Can you just repeat the first part of your question? I think you said we said the second quarter is the slowest quarter, and that's not what we said. You said that our fiscal third quarter seasonally is our slowest growth quarter because it's the highest mix of sandals, and closed-toe grows at 2X the rate of sandals. Right. Just any additional color on what you're seeing in the demand? Just curious, any additional kind of categories or franchises that you guys could call out? I mean, the sandals business continues to grow very nicely at double digits. I think we're not seeing any slowdown there. It's really just closed-toe grows faster. All right. Fair enough. Thanks so much. Best of luck. Thank you. The next question will be from Janine Stichter from BTIG. Janine, your line is live. Hi. Thanks for taking my question. So nice to see the DTC improvement. I think you mentioned some investments in online or e-commerce initiatives. I was hoping you could elaborate on that and then maybe just share how you're thinking about investments in that channel for the rest of the year. Thank you. Yeah. Thanks, Janine. DTC, the biggest growth has come from our membership base. As Oliver said in the opening comments, our membership base, we like to call it a fan base, is over 10 million right now. That's up 25% versus a year ago. As we market more specifically to that database, to our fan base, the average purchase is 20% higher. When you look at allocation of dollars against the DTC space, it's more lasered rather than shotgun. The return on investment is higher there. We're very happy with the growth in our membership, and we think this is just going to continue. Again, the return on investment from those members is significant. Thank you. Thank you. The next question will be from Erwan Rambourg from HSBC. Erwan, your line is live. Hi. Thanks a lot for taking my question. Congratulations. It's pretty rare to see consumer companies increasing guidance. Maybe a bit of a philosophical question for Oliver. At the time of the IPO, there was this rule of 20, 60, 30. So 20% top-line growth, 60% gross margin, 30% margin. I'm wondering how you think about the arbitrage between margin and sales. You did reference during the IPO process Hermès, for example, which is a company that refuses to increase its margin because every time they have excess contribution, they reinvest everything to continue to feed the top line and brand desirability, brand equity. You're sort of above the 30% margin today. I'm wondering if there would be a possibility to reinvest some of that to grow at a faster pace. I don't know if it's possible, actually, to grow at a faster pace. Theoretically, Asia growing at 50, not at 30, or you reinvesting quite a bit to move closer to that 20, 60, 30. Maybe related to that, your margins at a higher level than expected this year, is that sustainable? Are there reasons to believe that there is a particular boost for the current fiscal year that will be non-recurring in the outer years? Thank you. Thank you for your question. Be assured, I try to manage the margin down as good as possible. I do not want to have bad surprises on your side that you will start crying because we are delivering, I do not know, 34%, 35%. No, jokes aside, we prepare ourselves, as I said, because we as a team and as a company, we see this whole situation as a big opportunity for us. I fully acknowledge to you that there will be on the way second half of the year, but also sometime within 2026, fiscal year 2026, there will be opportunities for us to develop quicker in own retail, to grab some shelf space, to do land grabs wherever other brands are collapsing or fading away. Be assured, we are ready. We are prepared for this. That is why we always keep some powder dry to move on quick and to have enough ammunition to develop the brand quicker and with a more focus on quality. Quality for us means not only growth. It also means margin in the gross-profit margin and EBITDA margin, of course. One comment, allow me one comment to your question about Asia and the APAC region. It is wiser, from my perspective and from our perspective, to keep the speed as it is. We decided to roughly grow the double speed compared to the rest of the world within the APAC region. It seems like this is exactly the right tuning and the right setup to move on, yes, with seen partners and possibilities to be quicker. Honestly, creating more unit growth in this region, creating more logistic issues in this region, we need to prepare our whole organization. Keep in mind, we are fully vertically integrated supply chain. We have to organize by ourselves. If you speed up your organization and your growth, you have to make sure that your company is catching up with all this. It is not easy to organize everything simultaneously. I think we feel pretty good with our growth algorithm for the APAC region. Again, we are ready to take over shelf space. We are ready to take over own retail spaces much more aggressive like in the past. We believe that there will be a lot of opportunity out there. Thank you. Thanks a lot. Very useful. Maybe just on the second part around the margin being higher than expected this year, is that sustainable into the outer years? Hi, Erwan. It's Megan. We do not see anything that's one-off this year that would go away next year. In fact, we do expect some gross margin tailwind again further next year, given the absorption, the additional absorption of the Görlitz facility. Okay. Super useful. Thank you so much. Best of luck. Thank you. The next question will be from Sharon Zackfia from William Blair. Sharon, your line is live. Hi. Yeah. Thanks for taking the question. I was hoping you could comment on follow up on the comments on membership in the U.S. and kind of how that's trending now as a percent of your DTC sales. If you do see sign-ups as well in the 10 stores that you have in the U.S. into the membership program. As a corollary to that, how the membership is also faring in Europe. Thank you. Membership, this is David, thanks, Sharon. Membership is growing in the Europe region and in the Americas. We will be fully omni-capable very soon to do sign-ups in stores. It is less about the sign-ups and getting the information in your database. It is more about how you do personalization and segmentation and how you speak to these customers, these brand fans, and how you engage with them. That is where the real long-term benefit is. That is where I think we are seeing some of the continued momentum and growing momentum in our direct-to-consumer business. Again, 25% more than a year ago. The members spend on average 20% more. That would tell you that any investment that we make from a technology standpoint, from a resource standpoint, and focusing there will give us a very strong return on investment. Thank you. The next question will be from Adrien Duverger from Goldman Sachs. Adrien, your line is live. Hey. Thank you for taking my questions. The question would be on the opportunity that you see from a price mix, particularly with new products coming in the second half of 2025. A follow-up on this would be that within each of your product categories, in both open and closed-toe shoes, do you see a difference in the performance between the different price points of the products? As in any difference from low-end and high-end products. Thank you very much. Hey, this is Nicole. Thank you for your question. What we can generally see, I think we stated that also earlier, is the consumers voting for higher price points within our categories. What you see is that the leather share has been increasing constantly. Also in Q2, the leather share increased. Our closed-toe business outpaced our sandals business. Typically higher price points. Within the closed-toe business, you also see consumers voting much, much more for lace-up shoes than they did a couple of quarters back. High-priced executions within closed-toe are also trending with our consumers. If it comes to our sandal business specifically, what we definitely see is consumers coming in and buying much, much stronger premium embellishments. Rivet executions, flower executions, all those executions are doing pretty well with our consumers. Many times in our online sold out very quickly. We are also fast replenishing on those executions. Generally, you can see across the business, across the categories, we definitely have a premiumization of the business. Thank you. Thank you. The next question will be from Peter McGoldrick from Stifel. Your line is live, Peter. Hey. Thanks for taking the question. This will be the last question. Sorry. Can you talk about the scaling wholesale opportunity? You called out progress in youth sporting goods, outdoor, and department stores. Can you help us think about the forward opportunity for increasing channel representation? This is David. Thanks for the question. There is limited expansion of our footprint other than current doors. It is very surgical and very strategic. The vast majority of the growth, over 90%, comes from existing retail accounts. It is more expansion of the assortments. In EMEA, just to add a bit more color from our perspective, there is quite a substantial number of doors and partners that are not yet penetrated, and for a reason. We have a very close eye on the quality of the partners. We always give the example of Foot Locker in Europe. We do not serve them. We do not deliver to them because we do not think that they are currently adding something to our B2B portfolio. There are more partners in sport and outdoor, also in the lifestyle segment, that we have a close eye on and that we decide to service when we believe is the right moment. And yeah. Thank you. I just want to add one thing. I just want to add one thing because, I mean, you've seen probably our new product categories and different usage occasions. Yes, on the mid to long term, of course, we will add new chains and new doors and new channels because of simply the fact that we will then have developing a professional segment and orthopedic segment, shoes for outdoor, single-use outdoor, also in closed-toe. All these incremental usage occasions will definitely create also a broader and wider network of distribution. Thank you. Thank you. We are at the top of the hour. That does conclude today's Q&A session. It also concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.