Thank you. Welcome to Pandora's Conference Call following the release of our Q2 2014 results, distributed through the wire this morning at 8:00 A.M. The presentation for this call, as well as the full version of Pandora's Q2 release, is available on pandoragroup.com/investor. My name is Morten Eismark from Pandora Investor Relations, and with me here today is CEO Allan Leighton and CFO Henrik Holmark. In accordance with the guidance, sorry, the agenda on slide two, Allan will go through a few Q2 highlights, followed by Henrik, who will talk you through the Q2 numbers in more detail. Finally, Allan will conclude the presentation and we'll be happy to take your questions. Before handing over to Allan, I kindly ask you to pay close attention to the disclaimer on page three. Allan, please go ahead.
Yeah, good morning, everyone. If you can turn to slide four. As you can see from this morning's results, the strong development we saw in the Q1 of the year has continued into Q2. Revenue for the quarter increased to DKK 2.544 million, which corresponds to an increase of 32%, or 37% in local currency, as the currencies, in particular Asia and America, moved against us. The growth again was driven by the continued newness in our product portfolio, based on the drop system we've introduced. And during the quarter, we launched our Mother's Day Collection and our Summer Collection, both of which were well-received by our customers. And additionally, the Spring Collection, which we launched last quarter, continues to do well and sell through.
As part of our portfolio diversification in terms of product, our focus on rings and the rings category also continues to bear fruit. The category experienced high growth across all markets, and for the quarter, sales- in revenue from rings increased 200%, and with the sales- out figures equally strong. Then finally, our network expansion included more than 250 new Concept Stores added in the past year, and this continues to be an important growth driver for the company. Sales- out, which I'll return to in a couple of slides, continues to be positive, and again, we had positive like-for-like sales- out in all four reported markets.
EBITDA for the quarter increased 68.5% to DKK 893 million, and the EBITDA margin increased by 7.7 percentage points compared to Q2 2013, to 35.1%. The primary driver of the EBITDA was the lower commodity prices, which gave us about 4.7% margin. But we also gained some leverage on our revenue, particularly in our newer markets in Asia and Europe. And the increased profits led to a free cash flow of DKK 547 million for the quarter. We've upgraded our revenue guidance for the year to above DKK 11 billion to incorporate the impact of the exceptionally strong Q2 sales performance.
Our Share Buyback Program is on track, and we've now bought back what corresponds to about 2% share capital. Out of the DKK 2.4 billion we aim to buy back, we've now purchased shares worth about DKK 975 million. If you turn to slide five, this talks about the regional revenue development in the quarter. We continue to see strong revenue development in local currency across all the regions. Revenue from the Americas increased 11.7% in local currency, with the U.S. up 8.3% and other Americas up 22.7%. The U.S., in general, is performing well. All the regions are achieving good mid-single digit, like-for-like or more, bar the Northeast. This region, our oldest in the U.S., and as we talked about before, we need to refresh the network.
This process has started and will be accelerated by the purchase of the 28 stores from Hanoush that we announced earlier today, and I'll give you a bit more color on that later. Other Americas was helped by the inclusion of the revenue from Brazil, which, remember, has moved from Other Europe, as we acquired that from the distribution from our Spanish distributor last year. Canada continues to do well. There was a balancing off of sales- in revenue between the first and the Q2 which affected the sales- in, but the market continues to see positive double-digit, like-for-like sales growth. Revenue from Europe was up 65.7% for the quarter and continues to be driven primarily by the U.K. and the new markets, France, Italy, and Russia.
The U.K. had a very strong quarter, increased 60% or 53% in local currency, and that was driven by a combination of strong sales- out growth, expansion of the store network, particularly strong ring sales, and the continued success of the U.K. eStore. As we said a couple of times, we're very pleased with the development of our eStore, and we continue to see low return rates and healthy conversion rates. And as we see it, you know, very limited cannibalization. Other Europe increased 82%, with revenue from Italy, France, and Russia all increasing with high double-digit growth rates. Growth in the mentioned countries is driven by the high like-for-like growth rates, as well as continued expansion of the store network, primarily in France and Russia.
Russia continues to show good like-for-like growth against some high comparable. Germany was up 12.6% for the quarter, a growth that is still driven by our owned and operated Pandora stores. We're continuing to address and refresh the network, and part of the solution to that is to continue to open a number of owned and operated concept stores, which just drives the overall standard of in-store execution in that market. Revenue from Asia Pacific increased 75.3% in local currency, driven by practically all the markets in the region. Australia was up 38.4% in local currency, or just under 20% in Danish krone, and that's driven by a combination of new stores and organic growth.
The rings category in Australia continues to do very well, driven by the in-store focus on rings, and is really the prime example of the approach we're now rolling out into all our other key markets. Revenue from Asia, other Asia Pacific, which increased 157% in local currency, was driven by a host of countries, including Malaysia, Singapore, Hong Kong, and Taiwan. China and Japan are still not significant contributors to the revenue, but we're well advanced in our plan to drive these markets in 2015. If you move to slide six, this looks at the like-for-like sales. The like-for-like figures on this slide measures about 80% of the concept stores in the four countries. Remember, stores have to be open for more than 12 months to be included in like-for-like sales.
The positive like-for-like rates continued in the Q2 across all four major markets, and continue to be driven by the newness in our stores, as well as this continued driving focus on improving in-store execution in all the markets. The U.S. is, as I said, overperforming well. However, the like-for-like growth rates in the Northeast region is performing below average, and the store network there, as we said, needs to be refreshed. All the other major U.S. regions are growing with mid-single-digit or more, and we still expect the U.S. market as a whole to show that 3% to 5% like-for-like sales range in terms of growth for the year. Sales- out in Australia and the U.K. are again very, very strong, and as we said, driven by many things, including rings.
Germany is, as in last quarter, driven by our owned and operated stores, which for the quarter increased 16% in like-for-like sales growth, whereas the franchisee stores continue to operate close to zero. If you move to slide seven, this really flags a couple of events that we've had in the U.S., this year, in the last quarter, which we announced today. First of all, Hanoush, Hanoush is our biggest U.S. franchise. It's primarily in the Northeast, and has actually about 10% of all the concept stores in the U.S. And it's about 25% of all the sales-out in the Northeast. Hanoush have decided to sell this.
They want to pursue some other business interests, and therefore, we thought this was a good opportunity to buy these stores in a region where the performance is below the average. This gives us the opportunity to get hold of these stores, put our evolution concept in, put our disciplines in terms of in-store execution, and we will use this as the spearhead of the refresh of the Northeast network. The other major, and I think this is a pretty major piece of news, is this strategic alliance that we've built with Disney. This is a 10-year alliance where we have exclusivity.
It's for the U.S., and it covers all of Disney's theme parks in the U.S., Canada, Mexico, Puerto Rico, Central America, and the Caribbean. And importantly, it gives us the opportunity to introduce around 40 DVs into our initial concept store network in the U.S. in and around November for Christmas. Well, you know, a relationship with this description with Disney is a big signal of how the Pandora brand is seen around the world, and we're very excited about it, and we think that this is, in retail terms, a big opportunity for us.
So, a couple of moves there, which are very consistent with what we've been talking about, is how we're beginning to now extend our development in the U.S. If you move to slide eight, it talks about the performance of our newly launched products. In the Q2 , we again saw a positive reception of our new products, both among retailers and our, you know, end consumers. We launched the Mother's Day as well as the High Summer Collection in the quarter, and both were received very well. The High Summer Collection had pretty tough comparisons because the 2013 summer collection included the very successful single bangle. But if you take the one-off impact of the bangle out, actually, the 2014 summer collection sold out more volume than last year's collection, with only half the number of DVs.
And this performance and focus on sales per DV is again something that we're very focused on in, in, as a business. In total, our newer products, which have been launched within the last 12 months, contribute around 50% of the revenue, and that's unchanged. That seems to be a pretty consistent number now. But also that tells you that our older or more core products are continuing to do well, which is really equally important to the business. You know, you've got the two things driving our revenue, which is exactly where we want to be. The rollout of Essence Collection continues and is now in most of the Concept Stores globally. Feedback continues to be positive.
We continue to build the concept by spending the necessary amount of marketing, and that will continue to ramp up as we go into the H2 of the year. We also, in the quarter, launched some additional SKUs into the stores. If you go to slide nine, this really talks about our guidance, our expectation. Following another strong quarter, we've decided to increase our revenue guidance to more than DKK 11 billion. This is basically a result of incorporating the better-than-expected Q2, including a strong set of like-for-like figures. And the fact that we're now expecting to open more than 275 Concept Stores, up from the previously more than 225. And we've not changed our EBITDA margin guidance, which is kept at approximately 35%.
As we've said consistently now, we'll invest significantly in infrastructure in the H2 of 2014 in IT, further investment in our U.S. business, and also we'll see some investment ahead of the rollout into China and Japan. Also, as you can see in the mix, there's a few more owned and operated stores opening in the H2 . That is largely to do with the mix of markets, and that has a marginally diluting effect on EBITDA. Anyway, EBITDA guidance stays as is. CapEx and tax are unchanged at approximately DKK 550 million and 20%. So with that, I'll hand over to Henrik, who will give some more details on our financials.
Thanks, Allan. For that, please turn to slide 10. Allan previously talked about a strong revenue development across all regions, leading to total revenue growth in Danish kroner of 31.7% to DKK 2,544 million. In local currency, revenue increased by 37.1%. Volumes increased by 28.5%, and the average sales price increased slightly to 138 DKK from 134 DKK a year ago. The ASP increase was primarily driven by an increasing share of revenue coming from rings, as well as channel mix impacts. The sales prices for each individual products was virtually unchanged compared to same quarter last year. Like for like, organic growth in sales- in generated about 60% of the growth for the quarter, whereas network expansion represented the remaining 40% of the growth.
In Q2, more than 86%, the highest quarter ever, of our revenue came from branded distribution, up from 84% last year, which is in line with our strategy of focusing on branded sales channels, and in particularly, a focus on concept stores, which for the quarter, was 54% of revenue. Again, highest ever for one quarter. Please turn to slide 11. Now, looking at the development in our distribution network, total number of points of sale decreased by 26 in Q2 2014 compared to Q1 2014, to a total of 10,046 points of sale globally. During the quarter, we added 77 new concept stores and a net total of 132 branded points of sale.
The majority of the concept store openings in the quarter were in Europe and Americas, and with Russia and the U.S. being the largest contributors within this. The decrease in total number of stores is caused by our continued focus on closing the underperforming unbranded stores across all regions, to improve the quality of revenue and focus on branded stores, and as I mentioned, particularly on concept stores. As a consequence, the number of unbranded points of sales has been reduced by 661 stores in the past twelve months, which primarily comes from a significant reduction in the Nordic markets and in some of our distributor markets. Please turn to slide 12. Looking at product mix, all product categories increased significantly compared to Q2 2013.
Revenue from charms increased by 21.4% compared to same period last year, while revenue from silver and gold charm bracelets was up 29.1%. These categories in Q2 together represented 77.4%, which is a decrease from around 83% a year ago, primarily due to the strong performance in other categories, and in particular, rings. On rings, as Allan referred to the strong performance, revenue on rings tripled compared to same quarter last year. Very strong performance, and represented for the quarter, a record high 10.7% of the total revenue in Q2 2014. Important to note, this performance is also reflected in our sell-out performance. Revenue from rings continues to be driven by the improved offering, as well as an increased marketing effort focusing on rings.
Particularly, as Allan mentioned, Australia and also the U.K., have seen a strong contribution from rings, but actually, most markets are increasing their share of revenue generated from rings. The U.S. generated 10% of their revenue from rings for the quarter, which is a significant improvement from prior periods. The other jewelry category increased 30.5% and was driven by high growth in both necklaces and earrings. Please turn to slide 13. Gross profit was DKK 1,798 million in Q2 2014, compared to DKK 1,274 million in the same period last year, resulting in a gross margin of 70.7% in Q2 2014, compared to 66% last year. The increase in gross margin for the quarter compared to last year, was driven by lower hedge prices on commodities.
Excluding hedging and the time lag effect from my inventory, the underlying gross margin in Q2 2014 would have been approximately 73%, based on average gold and silver market prices for the quarter. Under the same assumptions, a 10% deviation in quarterly average gold and silver prices would impact our gross margin by 1 to 2 percentage points. Now to slide 14. Operating expenses for the quarter were DKK 957 million versus DKK 791 million in Q2 2013, representing 37.6% of revenue, versus 40.9% of revenue a year ago. Sales and distribution expenses were DKK 457 million, an increase of 28.4% compared to Q2 2013, and corresponding 18% of revenue compared to 18.4% in Q2 2013.
The increase in the absolute amount of sales and distribution expenses was mainly driven by costs following directly from higher revenue, an increased number of Pandora-owned stores, as well as costs related to expansion of the e-commerce platform. Marketing expenses were DKK 219 million, compared to DKK 203 million in Q2 2013, corresponding to 8.6% of revenue, compared to 10.5% in Q2 2013. Marketing expenses are traditionally low in the H1 and are expected to increase significantly in the H2 . Administrative expenses for the quarter increased 21.1% to DKK 281 million, representing 11% of revenue, compared to 12% in Q2 2013.
As we have previously flagged, and as Allan mentioned before, we are investing more in our infrastructure during 2014, and the increase in administrative costs were primarily due to costs related to, previously mentioned relocation of offices, including a recently, opened office in Brazil, as well as the announced, higher IT costs. But of course, also an increase in headcount in our administrative, functions to support the, the business. Please turn to slide 15. EBITDA margin for Q2 2014 increased by 68.5% to DKK 893 million, resulting in an EBITDA margin of 35.1% compared to 27.4% in Q2 2013.
The improvement in EBITDA margin is mainly due to the improved gross margin, as well as leverage on the cost base, particularly in new markets in Asia and Europe. The EBITDA margin for the Americas for the quarter was 46.3%. The improvement in margin from lower raw material prices was partly, partially offset by the inclusion of Brazil in other Americas, which had a diluting effect on margins of approximately one percentage point. In addition to that, we had some additional customs in the quarter. The EBITDA margin for Europe increased from 23.1% in Q2 2013 to 39.3% for the current quarter. The increase was primarily driven by improved gross margin, as well as leverage on the cost base from new markets as well as U.K. the new markets being Russia, Italy, and France.
EBITDA margin for Asia Pacific improved 10.6 percentage points to 46.7% for the quarter, mainly driven by increasing revenue in the region, as well as the improved gross margin, obviously. Please turn to slide 16. Net financial income for the quarter amounted to DKK -13 million, primarily related to interest expenses and other related costs. Income tax expenses were DKK 166 million in Q2 2014, implying an effective tax rate of 20% in accordance with our guidance. Reported net profit increased by 53.6% to DKK 662 million in the quarter, compared to a net profit of DKK 431 million in Q2 2013. Please turn to slide 17.
Operating working capital at the end of Q2 2014, compared to a, corresponded to 18% of the preceding twelve months revenue, compared to 24.9% at the end of Q2 2013, and 19.3% at the end of Q1 2014. So a continued strong performance. Inventory was DKK 1,684 million at the end of Q2 2014, corresponding to 16.5% of the preceding twelve months revenue, which compares to 16.4% in Q1 2014 and 18.5% in Q2 2013. The decrease compared to Q2 2013 is primarily due to lower commodity prices.
Trade receivables were DKK 679 million at the end of Q2 2014, corresponding to 7.8% of the preceding twelve months revenue, which is an improvement from 9.3% in Q1 2014 and 8.7% at the end of Q2 2013. Trade payables for the quarter were DKK 633 million compared to DKK 184 million at the end of Q2. As you would recall from previous quarters, this increase is primarily due to a reclassification of other payables to trade payables, which were made in Q3 2013. So from next quarter onwards, we will be on a like-for-like basis on that one. Other payables decreased primarily due to payment of withholding taxes related to the annual dividends. CapEx in Q2 2014 was DKK 86 million.
This includes investments in intangible assets of DKK 24 million, mainly related to key money in connection with opening of some Pandora-owned stores, as well as IT investments. Net interest-bearing debt at the end of Q2 2014 was DKK -440 million, corresponding to a net interest-bearing debt to EBITDA of -0.1x of the last twelve months EBITDA. With this, I'd like to hand back to Allan to conclude the presentation.
Thank you, Henrik. So if you go to slide 18, which is the summary slide, clearly, it's a very strong quarter. Revenue up 31.7% or 37.1% in local. I think one of the key points to take away is the second one, that, you know, this is increased diversification of our portfolio across product categories and geographies, which has been something we've been very, very focused on. The gross margin is up to 70.7%, EBITDA up 68.5%, EBITDA margin 35.1%. Strong free cash flow, DKK 547 million. Guidance in terms of revenue up to more than DKK 11 billion, and the share buyback on track. So that with that sort of concludes the presentation. So we'll just open it up for questions.
Thank you. If you would like to ask a question, please press star one on your telephone. To cancel the request, please press the hash key. That's star one if you would like to ask a question. Our first question comes from Michael Rasmussen from ABG. Please ask your question.
Yeah, hello, everybody, and once again, very well done, guys. Three questions, if I may. I'd like to start off by adding a bit more, or you having adding a bit more flavor on online. So, in the U.K. things to be still going very, very well. How are we in terms of share of revenues in the U.K.? And also, if you could add a bit more flavor on the performance in some of your other European markets. I mean, in some of these markets, you have been for almost a year now. Are you seeing more cannibalization, or is the performance as strong as you've seen in the U.K.? And then finally, what are your plans for the U.S. in terms of online? Second, theme being on Rings.
Now, the share you mentioned in Australia and the U.K. is up to about 20%. Do you see this potentially going higher? And do you have some kind of a group target for share of Rings in terms of revenues? And then finally, I just want to understand the dynamics in terms of your thinking on capital structure and cash flow generation. So, you do have about DKK 500 million of net cash on the balance sheet right now. And looking back at the history, typically, you have a lot stronger cash flow generation in the H2. And with only a still relatively limited part of the share buyback left in the H2 and about DKK 220 million in the CapEx program, what is the bridge in terms of understanding H2 ?
I mean, do you have much higher working capital requirements than normally or will you end the year with a kind of solid net cash position? Thank you.
Thanks, Michael. It's Allan. I'll take those, and three interesting questions. On online, as you know, we try and avoid as much as we can, giving you what the absolute percent of sales is. I think the U.K. is by far the most successful in a strange way, as I'd expect it to be. As we've said, we still enjoy very high conversion rates and very low returns. I've always said that, in my view, there's no reason why the online business, you know, shouldn't be around 10%. The U.K. is, you know, heading in that direction, let me put it that way. And we're very pleased with it.
As I say, I always stress the point that the most important thing, w hen I answer your U.S. question, comes to this, why is the U.K. so strong? Because it has fabulous service. It has incredible service levels, and therefore, we've worked very hard on that. So U.K. is strong, getting to where we need it to be, and I think the other thing about our online business is actually it's very profitable. Because the mix for me has always been, there's no point having online sales just for the sake of it. I like to feel that you can have an online business that's as profitable as your core business. So we're sort of looking at it through those dual lenses.
It is, as you know, being in, I think it's in Germany, Austria, I can never remember, France and the Netherlands. I'd still describe it as early days. There's reasonable business in those markets. The market construct is slightly different to the U.K. So I'd say we were pleased with the progress. We still see the three characteristics about returns being low, conversion being high, and again, a pretty good service. But I'd still describe those as still evolving, put it that way. With a bit more effort, I think, on our part needs to be put into them.
For the U.S., we, you know, clearly, at some stage, we would look at online in the U.S. We're not in a position to declare when we would do that, clearly. Clearly, it's a big opportunity in the U.S., but I go back to the point I always make on the U.S. The U.S. is a very big market, and therefore, fulfillment and service will be fundamental. Nobody will be doing anything in that market until they can convince us that the fulfillment and the service levels are gonna be as good as we've got, certainly, in the U.K. As far as Rings are concerned, you know, a strong performance, again, we don't, you know, we sort of take it as it goes.
You know, I always said that the first target for Rings is a DKK 1 billion business, and you know, I think that we're probably on track for that. The markets are very focused on it, and it's been a really interesting exercise because one of the big approaches for us is this portfolio approach. And, you know, as I describe it, moving to the right, having more product that we can sell that is not just our core business. And you've got to put focus on that, and you have to have marketing programs that support it, and you have to train people to be able to do that.
I'd say the Australia and the U.K. are the most advanced, but the others are coming up, coming up pretty quick, actually, and just by taking what we know works and making that happen. So we still believe there's a long way to go in rings. It's a much bigger part of our collection. I think Stephen and the design team have done a fantastic job on the product, as well. So we and also, you know, Thailand, as you can imagine, is learning all the time how to do this with real volume. So, you know, I think that on rings, very good progress, getting towards the first stage of where we need to be more to go. Capital structure, now we're halfway through the year.
You know, I see having a lot of cash as a high-class problem, if it's a problem. So I think that's always a good place to start. We'll see how the rest of the year turns out, and we have a capital structure that's, you know, declared today. If for any reason, it needs to change, then, you know, clearly, we'll come to you guys and say that it is changing. But at the moment, as I say, halfway through the year, it's a high-class problem, and let's see how the rest of the year pans out.
All right. Thank you very much, Allan.
The next question is from Lars Topholm from Carnegie. Please ask your question.
Yes, congrats with another set of strong results. A few questions from me also. If we start with the U.S., Allan, you flagged already after Q1 that you would have to adjust the footprint there. So now I wonder, this Hanoush deal, is that it, or are you gonna do more? And how big a disruption to day-to-day business should we expect? I.e., should we pencil in any like-for-like decline in the H2 of the year? Also, you explained that when you have more stores on your own book, it will, of course, increase your costs, everything else equal. But how will it affect the gross margin and the unhedged gross margin of 7% to 3% you'd have had for the quarter?
What would that have been, given the shop structure you see now, where you have the Hanoush stores? And then a question on Russia. I just wonder if you can put a little flavor on how much of your revenue is Russia, and if you've seen any disruptions or impact on business from what's going on geopolitically right now. And then a final question, if you look at intra-quarter momentum, is there anything that suggests growth should either accelerate or decelerate going into Q3? Thank you.
Okay, well, I'll try and do the Russia, the U.S. and decelerate, and then Henrik might talk about the margin then, I know. Russia, actually, yesterday, we opened our 140th Concept Store in Russia. So, Russia, I think we're still pleased. We opened 16 Concept Stores in the quarter, so we still got that momentum. We're pleased with the progress. We're definitely taking share, which is what we wanted to do with our investment, and we've still got a good like-for-likes. But I think you can definitely see that the Russian consumer is more cautious. And that's why I'm glad that we sort of took the action that we did. So, you know, I think we've still got momentum there.
Consumers certainly more cautious, but actually, I think we did exactly the right thing, and it seems to be working the way we expected it to work. On the U.S., as I say, you know, the way we think about the U.S. is, well, three ways. The first thing, I think I've said before, we know we've done a lot of work in the U.S. to look at what is the real growth opportunity in the U.S. And, you know, everything comes back and says, "Yes, there's still a lot of growth that we can get in that market," but there's a couple of things that we have to do differently.
One is we just have to have a better network, I think is the way to think about it. We have a smaller percent of Concept Stores in the U.S. than most of our other core markets. And as you can see in Q2, the Concept Stores are growing around 47%. So, we've definitely got to have more Concept Stores in the U.S. than we've got today. And secondly, we've got to, as I keep describing it, move to the right, not just the traditional charms and bracelet business. Continue to build that business, drive it through the collections, but also we've got to get into some of the other areas. And for the first time, the U.S. really started to get some traction on rings.
When you look at the U.S. regionally, which is the way you have to look at the U.S., you know, is the way I've always looked at it, all of the regions are actually performing pretty well. The one exception is the Northeast, which is, you know, in many ways, the most established. Hanoush, our biggest franchisee, they are about 25% of the like-for-like sales-out in the Northeast. They wanted to sell their business. That business has been a negative like-for-like, and therefore, we felt this was a really good opportunity to set the standard really, of what that network should look like in the Northeast, and that's why we're overdoing it. So I don't see a lot of disruption.
It's got a, you know, a big swallow for the U.S. to do this in one region, but, you know, they, they, they've got a big team and, and they're more than capable of, of doing it. But I think I've always said that, you know, for the year, I expect the U.S. to be in that 3% to 5% like-for-like range, which we've always flagged for them as being what we'd expect them to be. And, you know, that's still the objective that we have. But we will. I don't mind taking a bit of sales pain for a couple of quarters, to fix this, which is what I've always said, because, you know, we have to look at the business now in a, in a portfolio perspective.
The fact that the other markets are doing so well gives us the opportunity to just invest back a little bit into the U.S. to make sure, strategically, we get the growth opportunity, which we fundamentally know there to be had.
So, Allan, just to make sure I understand you correctly. So you say you don't mind taking a bit of sales pain, if that's what it takes, but it's not what you expect. Is that correctly understood?
I mean, it is. I don't mind taking the pain if we need to take the pain. And, but, you know, the US still has to operate within what we believe we can do, which is that 3% to 5% like-for-like. And, you know, we've always talked about 8% to 10% sales-in. That doesn't change at all, Lars, for the year.
Okay.
Yeah. Do you wanna, Henrik, you want to cover the O and the gross margin?
The gross margin? Yeah, sure. Lars, in the announcement, we mentioned that our O&O share in Q2 went from 10% to 15%. And we don't expect that to change from the 15% significantly in the H2 of the year. What we say is that we would be opening a higher share of O&O stores in the H2 compared to last year, which includes Hanoush. So you could say the gross margin in Q2 pretty much reflects that change in mix with more O&O stores.
Allan made a comment in the guidance on the EBITDA margin and some diluting effect on O&O stores, and that's basically because when you ramp up a new store, it in the initial period doesn't have quite the same EBITDA margin performance as the more established stores. So therefore, that higher share of O&Os in the H2 might have a slight diluting impact, but it's not, I mean, I'm not talking significant numbers. But the gross margin from mix in Q2 pretty much reflects what it also would look like with Hanoush included.
That's very clear. Thank you very much.
Thank you.
Thank you.
Next question is from Chiara Battistini from J.P. Morgan. Please ask your question.
Thank you very much. Good morning, everyone, and congratulations for the great numbers. Just a couple of questions from me, please. First one on the marketing expenses. You've mentioned that they are expected to grow significantly in H2. So if you could, if you could just remind us what we should be expecting for full year as percentage of sales, please. And then on Disney, on the announcement from this morning, if you could give us more color on, I don't know, ramp up of sales or any quantitative color you could give us on that announcement, please. Thank you very much. And also on Disney, if you're gonna just sell in there in the theme parks, or if you're gonna sell also in your own stores, please. Thank you very much.
Okay, I'll do that and sort of reverse order. Disney, we think is a really big thing for all sorts of different reasons and a particularly big thing for the U.S., where Disney is very, very strong. And it will be the big thing for us is concept stores. I mean, that's where the volume is going to come from. So absolutely, be in our concept stores, be around 40 DVs. Stephen and the design team have, I mean, the product is fabulous, is the only way I can describe it. So, we feel, and as you can imagine, you know, Disney also feel the same way.
So, you know, so we think this is a big opportunity for the U.S. in our Concept Stores. So that's, I think we'll say about, Disney. As far as the marketing is concerned, you know, we've got a lot of stuff in the H2 . You know, I'm very keen on Essence, that we continue to invest ahead of the game. You know, Essence is a very big idea if it's a concept. To build a concept takes two years, and it takes investing marketing money behind it, that if you look at it on a standalone basis, it wouldn't justify. So we're gonna continue to invest in Essence.
If anything, we may ramp that up, and we've got a lot of collection work coming through, and we've got some momentum in the businesses that frankly, we want to continue. So we've always talked around 10% as being the amount of money that we would really like to spend on marketing on a sort of annual basis. And I think we'd expect the H2 for the marketing spend to be closer to that number than it's been for a period of time.
Okay, but not for the full year, right? The 10%.
No, I mean, if we generally, we talk around 10%, but you can see we've not been achieving that.
Yeah.
I would expect it to be closer to that 10% number for the H2 of the year.
Perfect. Thank you very much. Very clear.
The next question is from Hans Gregersen from Nordea Markets. Please ask your question.
Yes, hello. A number of questions regarding the distribution network. Now owned and operated represents 15% of stores you are buying in Hanoush, and there may be more forward integration. Are you setting up a new target? You previously said that 10%, now you're cruising at 15, and it may be even higher. What are your thinking about this going forward? Then, secondly, you up the number of Concept Stores, in terms of guidance for this year. Where are the changes? Where are you adding these 50 stores? And as I've also asked on previous calls, is this related to China, or will that come on top when you do a final decision on that?
Then in terms of distribution points being closed down in Europe, you mentioned closing down owned stores in third-party markets and also in the Nordics. How much further do you need to go on that?
Okay, so let me take where the new Concept Stores are. They're largely Asia, South America, Russia, and the U.K. That's largely where the increments have come from, which, if you think about it, isn't surprising, 'cause if you look at there's huge growth in those markets, great momentum, and the franchise is very, very attractive to people. So that's basically where the additional stores are coming from. As far as owned and operated is concerned, t his number will move around a bit. Now, I've always said, actually, I'm quite comfortable in that 10% to 15% range. I don't actually think there is a number. And the reason I do is if we do owned and operated for a couple of reasons.
One is we put them into markets to establish the brand, and then often they you know get sold onto franchisee at some future date. Or an interesting thing in Hanoush, where we're going to take them, run them create the momentum back into that market, and then at some stage, we may well then revert them back to being franchise again. So it is a pretty you know flexible feast. And if you look at what's really driving the move into O&O, it's actually the newer markets, France and Italy, where we're having to put some of these in markets to you know create the franchise.
Germany, where it's a big part of the network rebuild, and the difference in performance between the owner-operated stores and the franchise stores is, as you heard, significant. And then the other thing that's gone into these numbers, we've acquired a number of distributors, Brazil, for example, the Netherlands, for example, Turkey, which are all, were all owner-operated. So I think there's a bit of flex in all this. I feel very comfortable with the number where we are today. I think it will move around, you know, clearly when we go into China and Japan, China will start off that way round. So I think, you know, this, this is probably not a bad number to be looking at for the next, you know, 12, 18 months.
And then we'll see, you know, where it develops that, depending on what happens in the market. We don't have a specific target for it. It's used very strategically or tactically in different markets. As far as the distribution network as a whole, I think the most important thing is this move, you know, we are branded, branded, branded. And really, we're Concept Store, Concept Store, Concept Store. I mean, let's not beat around the bush. Our Concept Stores, whether they be owner-operated or franchise, are significantly outperforming everything. You know, 47% growth in the quarter.
And so, you know, the tail of Whites and Silvers will continue to diminish over a period of time, and the business will become a much more Concept store-driven business, because that's where the branding really is, that's where the control really is, that's where the execution really is, and you see that in the performance.
Okay, and then, then just lastly, just follow up on Asia. You said more stores in Asia. Is that, driven by China, or have you made any decisions?
No, that's the current, that's the current market. So that's Singapore, Malaysia, Taiwan, Thailand, you know, that other Asia is doing incredibly well. No, it doesn't include China and Japan.
Great. Thanks.
The next question is Lars Topholm from Carnegie. Please ask your question.
It is called Carnegie. Yeah, I, I just forgot to get an answer on the intra-quarter momentum before. So can I ask again if anything in the quarter suggests that revenue would either accelerate or the opposite, going into Q3? Thank you.
Lars, we thought we might have got away with it when you moved away off the thing. As you know, we won't comment on that. You know, the only thing I would say to you is that clearly, the comparators get tougher as the quarters go on. You know, we've had two phenomenal quarters of growth, with, you know, the U.K., as an example, growing at the levels that it is today. In our view, that's unlikely to be the level that will be growing at, you know, going forward. So, apart from the normal, you know, comparators, if you look at the growth in some of these markets, in terms of percentage terms, you know, that's, I think, all we could say.
Okay. Thank you.
As a reminder, to ask a question, please press star one on your telephone. We have no further questions if you would like to continue.
Good. Okay. Well, thank you, everyone, and thanks for those questions. I think actually the way you should think about this call is quite a formative one for the business in terms of just how this portfolio approach to geography and product is really beginning to enable us to have, you know, many choices about where we invest and where we reinvest in markets. So, thanks for your time, and I know we'll see a lot of you over the next couple of days. Thank you.