Earnings Call: H2 2016

Mar 16, 2017

Thank you very much, everyone, for coming here to attend our 2016 final results announcement. Today, we have our Chairman, Mr. Tim Parker as well as our CEO, Mr. Ramesh Tingwala here in Hong Kong with us. Our CFO, Mr. Kyle General, unfortunately couldn't beat the snowstorm and is stuck in Boston. However, he will he's also joining us by teleconference. So without further ado, I will have Mr. Tim Parker give a few opening remarks and begin the presentation. Thank you very much. Okay. Thank you very much indeed, William, and a very warm welcome to you all this morning. And today, we are reporting another record set of results. And looking back over the 6 years since we floated the company, I think this is arguably the very best set of results that we have announced. Our net sales up 15.5 percent to a record $2,800,000,000 6% in organic terms, ignoring, of course, the significant contribution of Tumi. Our gross margin has moved up significantly from 52.6% up to 54.1%. And of course, that is very much the influence of the addition of 5 months of Tumi, which had higher gross margins than Samsonite, around 65%. And the EBITDA of the company up to a record $486,000,000 And when I look back to when I joined the business in 2,009, and I think we were on around $50,000,000 That gives you some idea of the extent of the progress of the company. And much of that, I think, is down to the excellent management abilities of the man on my left here. And we've seen over the last year an increase in constant currency in EBITDA terms of almost 23%. That is a fantastic achievement by any stretch of the imagination. And of course, our adjusted net income pretty much following 18.9% up, 20% up in constant currency terms. So a very satisfactory set of headline numbers. And we thought it might be useful, as I alluded to earlier, just to look back over the 6 years since Samsonite floated in 2011, and you can see that the company has achieved consistent growth, double digit growth in every single year and the CAGR at around 12.4%. So we said when we floated that we would be a double digit growth company in a strong market and we feel that we have been able to come up behind our pledge and our anticipated growth rate of the company. The next slide, I think, gives you, although there's quite a lot of words on it, really just emphasizes the diversified nature of our business and the fact that we are essentially driven by the very high growth, resilient growth market of travel around the world. It wasn't so long ago that Samsonite was really just Samsonite. In other words, about 80% of our sales were around the Samsonite brand. Today, we are a fully diversified company. So we draw sales from Tumi, of course, Samsonite, American Tourister, Speck, Gregory, Lipo. So the company actually has a brand at each level of the market. And the company now is joined by Tumi, which, of course, is a very strong brand in business products. And Samsonite, of course, has these incredibly strong positions in luggage and general products, which are carried around the market. If you look at the top right hand part of this slide, you can see that growth has been achieved throughout all of the Samsonite regions. And again, this is a source of great strength for the company. We don't rely on any single region. The company is number 1 in Asia, number 1 in America, number 1 in Europe and number 1 in Latin America. And if you look down to the bottom right hand part of the circle, This just reminds us again that the company is no longer simply a luggage business. We see ourselves as a bags company that does good luggage. And you can see the enormous growth, thanks to Tumi, in business products, and we are becoming increasingly a business which is not dependent on luggage, so that the share of non luggage in Samsonite sales has moved up from 31% to around 35%. The bottom left part of the circle, we simply describe the manner in which the company has moved in the direction of direct to consumer business. So excluding Tumi, we've seen a total growth of 11.8% in the direct to consumer channel in retail. And e commerce, which is becoming a bigger and bigger part of our business, was up 17%. And we expect in coming years that not only to clip through 10% of our business in e commerce, but we can see that business easily doubling in the next 4 to 5 years. And finally, I think the great strength of our company is that we have invested consistently behind our brands. So last year, we spent around 5.1% of our sales on advertising and promotion. That was slightly down as a percentage, but still up almost 9% on the year before. And we intend to invest even more behind our brands. I think we'd like to see that figure slightly higher in coming years. And I do believe that although we have very good products and arguably the best products in the marketplace, what marks the company out is our consistent backing of brands which are recognized throughout the world. So message from me is I think these are excellent set of results. The company is built on very secure foundations, a diversified business, and we look forward, I think, with increasing confidence to the future. We saw a better second half than first half last year, and we look forward to next year, I think, with some optimism. And with that, I will pass over to our CEO, Ramesh. Thank you. I'm on Slide 7. It's basically talking about how our net sales was partly offset by the currency translation. This is a bridge that we've tried to build it. 2015, our sales were about $2,400,000,000 from the organic growth, which is around 6% that means the existing brand delivered $145,000,000 Tumi 5 month period delivered $274,000,000 and there was a translation loss of around $42,000,000 Now net net net, the business grew by around 17.3%. And as Tim said before, the growth has come about from all the regions U. S, Europe, Latin America and Asia. The next slide gives you the net income bridge. 2015, our adjusted net income was $217,000,000 The organic growth in the net income was 15.74 percent, which brought $34,000,000 and Tumi brought in $30,000,000 as adjusted net income, which was partly set off by interest expenses on acquisition net of tax impact, which was about $23,000,000 So if you really put both of them together, you can see that the Tumi was already accretive to our business in the 5 month period of last year. This brings us to $258,000,000 which is about 20.5% growth versus last year. We are 2016, we are also since it was part year for Tumi's, we are giving you the visibility into the core business excluding Tumi numbers. If you look at it here, the constant currency growth in terms of the sales was around 6%. The gross margin improved by 6.5%, marginally higher because of the channel mix. The advertising came down slightly from 5.4% to 4.9%. As Tim rightly said, it is our long term vision to bring that number up more closer to around 6%. EBITDA moved up by 6.8%, which is more or less in line with the revenue growth and a slight improvement in the EBITDA percentage is mainly on account of slightly lower spend on advertising. As we said before, there's a strong increase in sales growth and adjusted EBITDA margin from first half to second half. The first half was definitely the business was somewhat challenged. If you look at the number, the first half our sales grew by around 4.1%. These are the core business excluding Tumi, where in the second half we saw a growth of 7.8%, driven largely by China. China first half was 0.4% growth, it was minus 0.4%. It was almost flat versus last year. But in the second half, China rebounded to 10.2% growth. And similarly, we have seen some strong growth in North America. North America first half was 0.5%, whereas second half was 7.3%. There's also a further acceleration in growth in Latin America, where it was 13.6% in first half and in second half it became 21 point 6%. And we do see a similar momentum in the Q1 of 2017. These are Tumi results for 5 month period. The net sales grew by 9.7% from $251,000,000 to $276,000,000 Gross margin also improved from 60 2.7% to 64.7 percent. Part of it is because they start to get some benefit of sourcing from Samsonite team. But I would say this is just the beginning. Our long term objective is to see Tumi's gross margin being more closer to around 70%. We believe by 2018, we should get there. We also see that we dialed up the A and P spend behind the brand Tumi from 2.8% to 6.7%. The result of that was that there's a small marginal drop in EBITDA. But if you really adjust the additional spend on A and P, then EBITDA margin moved up from 26.7% to 26.9% for the 5 month period. To me acquisition integration update, integration is going largely as planned. Management structure is in place. Rob Cooper is General Manager for our North American business. Asia and Europe has been integrated with our regional teams. SAP conversion is on track for May 2017, which will allow us then to get the balanced cost synergies, which we had planned. Buyback of distributors progressing ahead of plan. South Korea is already completed with effective from 1st January 2017, its directly operated market. We're also making very good progress in some other key markets, namely China and Hong Kong. So before end of this year, all major markets will be directly operated markets. Sourcing initiatives is also going very well. Additional gross margin improvements are anticipated in 2017 and beyond. As I said, by end of 2018, we expect that the gross margin improvement for Tumi's core business would be closer to around 1,000 basis points. Part of that, we will invest back behind the brand. Our intention is of that 1,000 basis point probably 700 basis point will be invested back behind brand because the brand investment is low today and other part of it will drop down to improve the profitability. The timing of certain cost synergies intentionally has been delayed. To be careful not to disrupt the business, estimated synergy savings for to date is $3,700,000 which is approximately a run rate of $9,000,000 annual saving. We believe that the balance by end of 2018, the synergies would be running at a rate of around $25,000,000 per year. The big part or big chunk of the next level of synergies will be brought back home once we implement SAP, which is on track to be completed by May 2017. This gives you a little bit of a brief as how the numbers look like by region. So if you look at 2016, there is a growth of around 24.2%. Part of it is also because of the consolidation of Samsonite Japan. Now if you peel that number away then it's about 2.9% growth. North America grew by 6.6%, Europe by 3.9% and corporate is some of the deals which is 37%. Overall growth has been around 9.7%. The EBITDA margin has come down a little bit, but if you peel away the additional $10,000,000 that we have spent on advertising, then EBITDA actually increased by 14.8% during the same period. The overall EBITDA margin is down from 26.7 percent to 23.3%. Once again, this is mainly on account of additional A and P spend. Otherwise it would have been 26.9%. Going by region now. Asia, strong net sales and profit growth aided by addition of Tumi of course and supported by moderate growth in the organic business. The organic business grew by around 9.9%. Excluding Tumi, the growth has been around 4%. The EBITDA grew by around $5,000,000 and as a percentage of sales is more or less in line with last year excluding Tumi. When we look at different countries, I think in the first half, 3 of our large markets were challenged, Korea, India and China. What we have seen in the second half is that China has recovered very strongly. It has delivered more than 10% growth in the second half. India started very well in quarter 3, but by the time it came into quarter 4 because of certain governmental policies of demonetization, the growth got moderated. Korea still continues to feel pressures of political uncertainty and some other pressures that it has because of different states that it has with the Chinese government. So when we look at our outlook in quarter 1, we see India coming back very strongly and in line with our Chinese growth. So both these markets are now delivering double digit growth, whereas Korea still continues to be range bound. All other markets are more or less the same. Our North American business grew by 26.8 percent. Excluding Tumi, it grew by 3.9%. But here again, when you look at it, our first half to the second half, when we look at our first half, our growth was moderated, but we see a strong rebound in the second half. Even our comp ratios in North America, the first half we had negative comp 4.4 percent in second half it was positive 5.2%. So that itself reflects that there has been a rebound in our business in North America in the second half, and we see similar momentum continuing in 2017. And within North America, practically all our brands delivered strong growth. Europe, we had a very strong growth. Excluding Tumi, the constant currency growth was 10.3%, including Tumi, it was 16.1%. The EBITDA also marginally moved up from 17% to 17.9%, which is about 100 basis point improvement over last year. Part of it is also due to slightly lower advertising spend in 2016. But there were most of the markets, most of the countries in Europe delivered very strong numbers. U. K. 21.3 percent Germany 15.7 percent Italy 11.3 percent and Russia 23 point 3%. There was a very strong growth in direct to consumer channels. Retail grew by 14.6%, driven by 7.6% same store growth and 6 additional stores. The direct to consumer e commerce also grew very nicely by 31.3%. Wholesale, which is continues to be an important channel for our European business grew by 7.6%. And we see similarly very strong growth across brands. Samsonite grew by 7.8%, American Tourister by 21.9%, Lippo by 27%, Gregory by 31%. And we see similar all rounded growth in different categories. Travel grew by 7.2%, business by 17.6% and casual category grew by 37.2%. So I would say that Europe was a very, very satisfying performance in 2016. And we see similar very strong momentum continuing in 2017, especially in the Q1. Latin America, which continues to be our region where we continue to make investment, investment in retail investment, investment in team and investment in infrastructure. It also delivered very strong growth 17.4 percent driven by a very strong growth in Mexico of 30%, Chile 6.8%, Chile is a more matured market for us in Latin America, Brazil by 25.5%. It largely came off retail channel, which is 37.8% growth and the same store comp also were very nice 9.4%. Wholesale channel, which is important in Mexico, grew by 17.6% and this growth is also coming as a result of growth of all our brands. Samsonite grew by 18.9%, American Tourister almost doubled to 98.5%. American Tourister now makes up for around 40% of the revenue of the region and continues to grow. Extreme, which is our backpack brand also grew by 9.4%. Sacred, which is our handbag brand there grew by 17.1%. Sex O Line is a low end luggage brand, which also grew by 5.5%. Similarly, category wise, travel grew by 22.6%, business by 25.7%, casual and accessories by 9.5% percent 6.9%. I think there was an all round strong growth in the numbers. Profitability was a little bit down by 400 basis points, which was by design because we were investing to reinforce our infrastructure there in terms of new retail expansion. We have moved to new warehouse. We are now migrating all the countries and implementing SAP there. So these are one off costs and we believe over a period of time, Latin America should be able to deliver similar profitability as our other regions. Constant currency net sales growth in most key markets. Look at U. S. Overall grew by 3.8%, whereas the first half, the growth was only 0.7%. So there was an acceleration in from first half to second half in U. S. China, which I said before, China grew by had a minus 0.4% in first half, which had a strong rebound with 10.2% finishing the year with 5.3%. Korea still is minus 1% when the first half was like that. Korea does continue to suffer because of political uncertainty and lack of Chinese tourists going there. But probably those same Chinese tourists, we are now finding them in other countries more particularly in Europe. That is why when you look at our European numbers, they had a very strong growth. Japan 12.2% Germany 15 point 7% Italy 11.1 percent Australia 21% U. K. 21% and likewise. India, we see here had a flat year. It did started. Quarter 3 was a strong year. First half was a tough period for us. But quarter 4, again, because of the monetization, it lost momentum. But we find that in quarter 1 of this year, the momentum is coming back and it is back to delivering double digit sales growth. Some of the other emerging countries also had some very good numbers Mexico 30%, Russia 21%, and likewise. Direct to consumer channel sales accelerated with acquisition of Tumi. So when you look at last year numbers, Samsonite's known travels, I mean the retail or direct to consumer, which includes for us e commerce as well as brick and mortar contribution was 23% and wholesale was 77%. Tumi is the other way around where they have more direct to consumer is about 60% of the business. Combined together, today, our direct to consumer business is about 30% 70% is wholesale. And this is taking into account 5 month period of Tumi. But if you really combine the full year number of Tumi, as Tim rightly said, the non travel contribution has already not non travel, the direct to consumer contribution has already moved to around 35%. To give a little bit of perspective, before Tim came on board, this number for Samsonite was less than 10%, it was single digit, low single digit. So we were largely a single brand and largely a luggage company. From there, we have reinvented ourselves where the non luggage is now contributing to around 35% of the sales. And we had expressed our desire during IPO days that for a period of time, we would like to see our non travel component of our business to become 50% of the business and we are making very good progress every year. That makes the business far more resilient because the buying cycle for non travel is shorter. The non travel product also are more resilient to any kind of exogenous shocks. And within this direct to consumer, e commerce is growing very, very rapidly. So if you look at our e commerce growth in 2016 has been 17.2% and e commerce contribution to the entire sales is now up to 9.5% as compared to 8.5% last year. I have no hesitation to believe that that number will keep growing it and it could be more like 15%, 20% in next handful of years. Diversified brand portfolio, Tim spoke about it. We were largely assumption was our the brand which contributed to more than 90% of the sales. As we look at it on a full year basis, if I combine the 12 month number of Tumi, the other brands and Samsonite is only fifty-fifty. So the contribution of non Samsung branch of portfolio, if I take 12 months number of it to me is already reaching that 50%, 50% kind of a mark. I think this also has been a great achievement, which have been made under the leadership of Tim. If you see that all our brands have shown very strong growth, Samsung growing by 5.9%. American Blue Star covered it separately, which had a little bit lower growth, spec 15.9%, Hycera had also a smaller growth, Gregory, Lippo, Hartman all of them had a strong growth. Asia when you look at it because there are 3 big markets in Asia as I spelled before In the first half more particularly these markets were challenged which was Korea, India and China. And because of that we have seen a negative growth in Asia with American Tourister of 7.3%, high visibility into the quarter one number. In a quarter one number, American Tourister in Asia has rebound to deliver high single digit growth. In spite of Korea still remaining somewhat challenged, primarily riding on good momentum of this brand now back in China and in India. North America in any way grew by 3.1% and Europe it grew by 21.9% and Latin America by 98.5%. So I have no hesitation to say that American Dooster would be back to high single digit growth in 2017. Spec has been no, not spec, Hycera also have seen a small degrowth, which is mainly on account of some of the businesses that we had last year did not get repeated in 2016. I think by 2017, we will be fine. And we also decided to exit spec Hycera from few of the market because we wanted to prioritize few other brands, which have been recently acquired by the company. So because of that also you see a small degrowth in Hycera. So Hycera going forward in 2017 would be focused and we will put all our resource behind Icera to grow it in few markets. North America, it is already doing very well. Australia, it continues to do extremely well. In Asia, we will focus our efforts of Hycera only in Korea and Philippines. And similarly, we will drop out of HISERA in Europe for the time being. That does not mean that this is a permanent decision. We want to allocate our resource and do justice in these markets. And then in coming years, we would once again launch Hycyra in other markets as well. Camillen, which is a new entry price point brand, which has been just recently introduced in quarter 4 in Asia, more particularly in India, Middle East, Korea and China is off to a good start. I think that could become one of our major brands in next handful of years, especially in emerging markets. The next few slides are giving you a flavor of different products that we have under our different brands. All key categories contributed to net sales growth. Travel, the constant currency growth was around 11.4% and without Tumi it was 4.5%. Business grew by 38.2%, without Tumi 3.8%, casual 16.4%, SSRI is 47.3%. And others is negative because there were some third party brands, which we were selling in our rolling luggage chain of stores. We have been cutting down some of those third party brands. That's why I see a small degrowth there. 8.9% increase in global advertising as a percentage, it came down a little bit. It was partly to also allow us to navigate the tough times, but it's definitely our intention to creep up the A and P spend from 5.1% last year to more like 6%, 6.5% over next handful of years. Target advertising, these are the few pictures of different kind of advertising, which is done by us across different parts of the world. We look for my friend Kyle on the line. Yes. And now we will have Kyle go through the financial highlights. Kyle? Yes. Good morning, everyone. William, can you hear me okay? It is Kyle. Good morning, everyone. William, can you hear me okay? Yes. Yes. Page 28 now. Okay, great. So yes, we're on Page 28, financial highlights. There's a lot on the page because there's a lot to talk about on financial highlights this year. As Sam started with sales growth or reported sales of $2,800,000 or $1,000,000,000 growth of 6% or around 100 and $45,000,000 of growth in the organic business, plus $276,000,000 of Tumi for the 5 months. Adjusted net income, up 18.9 percent despite a year on year increase in interest expense of $40,500,000 So including the interest expense for the Tumi deal, we had adjusted net income of 18.9%. Very strong operating cash flow, dollars 260,000,000 up slightly from last year despite the increases in cash interest and $37,000,000 of acquisition related costs. So underlying cash generation in the business very, very strong. Our net debt position is $1,570,000,000 or $1,000,000 I'm sorry, and $368,000,000 of cash and cash equivalents with debt of $1,900,000,000 And as we know, that was to finance the Tumi acquisition. We have a revolver revolving facility of $500,000,000 of which we, at year end, only had $13,000,000 drawn, so plenty of capacity on our revolving facility. We're in compliance with all of our debt covenants at the end of the year. Our pro form a net leverage is at 2.84%, slightly ahead of what we probably guided in our own anticipated levels. So we thought we'd be around 3x levered at the end of the year. So we're running a bit better than that. We were able to reprice our debt in February of 2017, which had the effect of lowering our cash interest expense by around $16,000,000 in the 1st full year. From an interest rate perspective, what that means is on our term loan A, we reduced from LIBOR plus 2.75 to LIBOR plus 200. In our term loan B, we reduced from LIBOR 3.25 to LIBOR 2.25. So we were quite happy to catch the market in this repricing, and that will go a long way in helping us deliver accretion with Tumi in its 1st full year in 2017. Net working capital continues to run very strong, even including Tumi. We're running below our target. So we're running at 12.6% and our target has been around 14%. So we're quite happy with that, and we'll see that improve as we fully integrate Tumi, particularly on the back of the SAP implementation. CapEx spend for 2016 was just under $70,000,000 largely focused on continue to grow retail and store modifications and also some investments we're making in some of our production facilities, particularly in Hungary. In connection with the liquidation of our pension plan, this was a project we've been working on for several years. We're able to finally annuitize our U. S. Pension plan. And on the back of the accounting for that, we had a large deferred tax liability that was reversed in our numbers. We end up with a $56,000,000 $57,000,000 deferred tax liability removed, which is a benefit to our tax expense for this year. We also had a small gain in exiting the pension plan of around $6,000,000 Excluding the tax benefit for this planned liquidation And also, there's a slight rate reduction in Luxembourg, and we were able to deduct a lot of the acquisition costs for Tumi. Our effective tax rate for the year on a reported basis is actually a benefit. If I adjust for these items, our effective tax rate is running around 27 0.8% for 2016 compared to 25.4% for 2015. And I'll show you a table so you can understand our tax rate. And that's roughly where we'll be on a go forward basis around 27% to 28%. On Board meeting yesterday, we approved the cash distribution to shareholders of $97,000,000 That's up 4.3% from what we did last year. It's a slight increase to our payout ratio. So if you adjust for the pension liquidation tax benefit, which is really a non cash item, that payout ratio is around 48.8%, up from roughly 47% last year. And our payout yield is up slightly year over year as well. If I go to Slide 29, what I've done here is try to break down what we view as underlying net income growth for the business, and then some of what I would label specific to 2016 or more particularly the one time items that we had in 2016. So if you look at the left of this chart, you can see our underlying business delivered $32,000,000 of growth. If you look at Tumi in these three buckets and we group them together, that would say Tumi is breakeven for 2016 for the 5 month period, including the interest cost and the amortization with $30,000,000 of net income added for Tumi for those 5 months. To the right side of the page are the one offs, which is the benefit from the pension liquidation, dollars 57,000,000 the tax affected acquisition costs to complete the deal, which flew through our P and L, that's $26,000,000 And there were some small fees associated with getting the Tumi deal done before we closed the deal in August. And so that is a helpful slide hopefully for you to really understand underlying growth, because we're very positive we have a net benefit for one time items in our underlying growth, but I think it's very important that you adjust those when you're looking at underlying growth for the business. On Slide 30, probably more numbers than you want to see, but this is a breakdown of our tax rate. I might just draw you to a couple of points. In the middle of the page, our effective tax rate on a combined basis, including Tumi, excluding what I would label as one time items, our tax rate is around 27.8%. We have 3 one time items, the impact of 2 acquisition costs, which gave us a 4.5% benefit to our tax rate. Luxembourg had a rate decrease. And when we apply that decrease to the deferred tax liabilities we're carrying, that had around a $9,000,000 benefit to our taxes in the year or 3.3%. And then as we said, the pension plan liquidation had a very meaningful impact to our tax rate to end up with effectively a tax benefit in 2016. For guidance for next year, I think our tax rate will be very similar to our effective tax rate on the combined group, around 28%. We're putting a range of 27% to 30%. I think we'll be right in the middle of that range from an effective tax rate on a go forward basis, which is in line, maybe slightly better than what we anticipated when we were evaluating the Tumi transaction on a combined basis. If I go to Slide 31, really just a snapshot of our balance sheet. I covered most of this. We had cash last year of $180,000,000 We had $368,000,000 of cash at the end of 'sixteen. Tumi came in with $145,000,000 of cash. That's a bit of the reason for the step up. We generated $260,000,000 of cash. And last year, we spent around $70,000,000 on CapEx $93,000,000 on distribution to shareholders. So we're in a solid cash position. And from a debt perspective, as we said, our leverage ratio is running around 2.84 and we have around $490,000,000 availability on our revolver. So from a debt perspective, we're running slightly better than our own expectations for the end of the year. And then, as I said, continuing strong working capital efficiency of 12.6%, which is on Page 32. And you can see on this page that our working capital last year efficiency was 11.8%. That's set up to 12.6%, larger with Qumie coming in for the 5 month period. And we annualized Qumie for purposes of calculating these numbers. And so if you look down the page, our inventory days, 111 last year, 109. If I peel Tumi out, we've actually gone to 102 days for our core cement business. Tumi has a slightly slower inventory turn, of which we will be able to tweak as we help manage their inventory and their planning. And so I anticipate that our inventory days will run roughly in 105 days for the full year 2017, which is where we've historically run. Trade payable I mean, trade receivables, slightly down really off the back of the mix of the Tumi business, a little more retail, which will bring down your receivable days. And days payable slightly down 109 per 100 days. As we bring Tumi on to our payment terms, we will see that those payable days will set back up. So we're quite happy with the working capital level of 12.6%, and you should expect to see some improvement from that for the full year 2017 once we fully integrate Tumi within our systems. And then from a CapEx perspective, I covered this, but when you look at where we're focused, it's largely retail expansion, dollars 34,000,000 this year and investments in product development, R and D supply largely in our 100 facilities around $24,000,000 Tumi has a CapEx spend of around $30,000,000 to $40,000,000 and we've guided in our annual results that our next year CapEx spend will be around $115,000,000 really reflecting the full year of Fumi plus our core business. And with that, I'll turn it back to you Ramesh. Thank you, Talin. Outlook and strategies for 2017, we believe that increase in disposable income and living standards in developing countries, growing popularity of outdoor and adventure sports and growth of tourism are all expected to drive growth of global luggage market at a CAGR of 6.1% through 2021. That should allow us to grow our business at a pace slightly faster than that. Continue to develop companies well diversified, multi brand, multi category, multi channel, luggage and bag and accessories business that we spoke about it. As I told you that as of now, non travel component of our business is around 40% combined together with Tumi. And we see no reason over next handful of years it will not hit a 50% mark, which was our original strategy as spelled out by Tim during our IPO days. Leverage the company's regional management structure, sourcing and distribution expertise and marketing engine to extend Tumi's strong brand into new market and penetrate deeper into existing channels. As we all know, Tumi is a great brand, but it is has a very strong distribution in North America. But by same definition, there is lot of opportunity to grow this brand into less represented markets of Asia and Europe and that would continue to be our focus in 2017 beyond. We'll also tactfully deploy our multi brand to operate wider price point and broader consumer demographics in each market. As we spell that we have launched this brand Kamalayan in India, Middle East and some of the Southeast Asian countries to operate a price segment, which is sitting below American Tourister. So it's a part of our spelled out strategy to cover all different price segments of the market to reach out to different consumer demographics in each of the categories of luggage, bags and accessories increase the portion of group's direct to consumer channel by growing direct to consumer e commerce and through targeted expansion of brick and mortar retail presence. As we spelled out before, this component is right now around 35% of our sales. Out of that 35% around 6%, 6.5% is e commerce. We believe that this 35% can also grow to around 50% within that e commerce from currently around 5%, 5.5% to grow to around 15%. So overall, both together could be around 50% of our business. We will continue to invest in group's core brand with sustained R and D spending to produce lighter, stronger new material, new processes and exciting innovating new products. We also intend to continue to invest in marketing in 2017 and support the global expansion of Tumi as well as drive the core brands of Samsung and American Tourister, Lippo and few others. As I said before, from 5.1% over next handful of years, we do intend to move up our A and P spend to get closer to more like 6.5%. Execute on market opportunities to recently acquired brands for further diversify group's product offering into non travel category. Thank you. Thank you, Tim, Ramesh and Kyle. We are now open the floor to questions. Hi, Raymond from Credit Suisse. Thank you, William. Thank you, management. First of all, congratulations on the very strong results. I have three questions. Number one is, Ramesh, you just mentioned that in 1Q 'seventeen, you're seeing a similar momentum in terms of organic sales growth versus second half. So is it like on a per regional basis, it is like the case or on a group basis, this is like the case? Can you elaborate a little bit? And what's your any guidance for maybe first half of this year in terms of the organic sales growth? And my second question is on the Tumi. We know that Tumi, the A and P expenses will further increase in terms of ratio and the absolute amount. But you also mentioned about there will be an additional RMB9 1,000,000 cost saving for the full year annualized. So if net net, do we expect Tumi's EBITDA margin to drop this year after spending the advertisements, additional advertisements? And then thirdly is on the debt level. I remember that like we do have mentioned previously, we probably mentioned that we might use the internal cash flow to gradually repay the debt. So is there any late period that is locked up that we cannot repay? Or when is the schedule that we plan to gradually pay down the debt for financing to me? The first one, the Q1 momentum, as I said, we see a similar momentum continuing from second half of last year into Q1. There could be country to country variances. But when you really look at everything put together, in the second half of last year, our core business grew by around the mid single digit. And that's the same kind of a number we are looking at it in the quarter 1. And probably same thing continuing in rest of the year. There could be some small movement between one country to another country. As I said, we do see a continual softness in Korea, but we see a strong growth in European markets. So it could be movement from country to country, region to region, but overall these are the numbers we're looking at it. Now Tumi's A and P, we believe a brand like Tumi, the sustainable level of A and P spend should be more like 600 basis points, 650 basis points, which is more or less in line with what we would like to otherwise spend on our other brands. Historically, it has been very underinvested brand. They've been investing about, let's say, 100 basis points, 150 basis points of the sales in the past, which we want to creep it up. We believe that there is beyond cost synergies, there are also opportunities to move the gross margin up. So what you would find will be that in whatever cost benefits that we can get out of synergies or through improvement on the sourcing side, all of it in the 1st year will go in funding the A and P of Tumi. When you get into 2018, that means that the profitability of Tumi would remain similar level as it is now. But when you get into 2018, where we will be able to secure our pocket most of the cost savings and margin improvement. At that point of time, you will see that the profitability of Tumi is starting to creep up. On the debt level, is Kyle there? Yes. Kyle, would you like to take the question on the debt? Yes. Can you hear me? Yes. Okay. So we started actually repaying some of the debt. We had a small amortization at the end of 2016. We have an amortization schedule that builds over time. So we'll be paying required debt payments at the end of or over the period of 2017. And then the way our debt facility works is excess cash flow, There'll be a portion of that that will go into repaying debt. So it's not a perfect number, but we'll probably end up paying somewhere between $50,000,000 to $100,000,000 against the debt for 2017, which will be a small portion of required amortization and then excess cash flow that will get applied to the debt. And you'll see over the next couple of years, our leverage ratio come down. I think we had guided in kind of in the 2 to 3 year period, full years following closing, we'll probably get close to 2x lever. And our view is that, that it will still be achievable with both debt repayment and growth in EBITDA. We had a little extra cash at the end of the year. If you look at our cash levels, some of that is the Tumi cash coming in. But the other piece is we knew we were going to be buying back some of these distributors that Ramesh talked about as far as integrating the Tumi business. And so right out of the gate in January, we spent some for Korea. We're working on some of these other distributors. And so some of that cash will go towards buying that new distributor. These are low ticket items. They're not big purchases, but a piece of the puzzle and why we're carrying a little bit extra cash at the end of the year. Thank you, Kyle. Yes, in the back first. Thank you. This is Mariana Koo from CSA. Thank you, management, for taking my questions. And again, congratulations on a very strong set of results. I have three questions. My first one is on the sourcing side. Could you actually help us kind of dissect on or think about any possible impact from the U. S. Side in terms of policy and how you might actually change your strategy on your sourcing side? Number 2 is just on if you could give us a bit more background on the tax benefit, the liquidation situation of the retirement plan and if there could be any impact on the operating expenses like going forward, I. E, the EBITDA margin for North America? And number 3 is just a small question on Tumi IP. I think previously we talked about potentially moving the IP for Tumi and there could be some tax impact. If you could help us get an update on that, that would be great. Thank you. Okay. On the sourcing, I know that it has been covered a bit too much in the press. We have been it's not a recent thing. We have been reevaluating our sourcing strategy for the company as a whole for last couple of years. And result of that was that already a couple of years back, we made investment in a manufacturing plant in Hungary with 2 objectives. At that time, our objective was that we wanted to bring manufacturing closer to the market so that we can follow the ups and downs in the market much more closely. When you source the product in the Orient, you have a 6 month of pipeline. So if you have a collection coming in and if the collection doesn't do well, even if you close the tap, still 6 months of the shit will still be flowing in. And we have to figure it out what you're going to do with that. Whereas when you are doing manufacturing closer home, whether close to the market, you can probably correct the inventory planning month to month or even week to week. So that was the advantage. But when the plant has got commissioned in Hungary, we were also pleasantly surprised to see that the cost of goods in Hungary is not necessarily higher than China, because technologies have changed, a lot more automation can be done. And the result of that is we are now starting to evaluate should we not look at a similar opportunity in our North American market, which is our largest business market? At this stage, this was never a project which is getting influenced by a precedential policy, which may change from 1 precedent to another precedent. We are talking about cost of goods versus cost of goods. We are talking about how can we better serve the market and follow the trends in the market much more closely. At this stage, we have just done some preliminary work in terms of the studies there. And it does this is an internal study. And the conclusion of the internal study is there. It does make economic sense for us. And this is not based upon supposedly increased import duty or reduced import duty. This is purely based upon status quo. But this is just an internal study. We are now going to start a more objective external study. Now based on that, whatever will come out of it, we will take an appropriate decision. I must tell you, manufacturing is not about taking a decision linked with 1 political leadership because when you take a decision for manufacturing, it is for next couple of decades and where many different political parties will come and go. So we will take a more informed decision, but I must admit it that we are extremely satisfied with the performance of or our decision which was taken under Tim Parker's leadership of expanding our manufacturing in Europe. The last one was the tax benefits. Yes. The next question is about the tax benefits. So perhaps Kyle can jump in on that. Yes. So we have two questions. Pension, so if you remember on the U. S. Pension plan, we had froze this plan several years back, and we were just navigating towards annuitizing and removing it. So the annual cost to our U. S. Business was pretty low. It's probably a shade under $2,000,000 So you're not going to see a big P and L impact with us liquidating this. What it does do is take the risk of kind of variability in the pension liability growing over time. So but from a P and L perspective, a slight benefit, nothing you really notice in margins for the U. S. Business. As far as moving to Tumi IP, we're in the final phases of that. I think we had guided to be some tax impacts to that. I think it's probably a little less than what we guided. We're probably looking at a cash tax cost of around $15,000,000 to $20,000,000 and that's being finalized here over the next probably over the next 2 months. Great. Next question please. Anne in front please. Go ahead. Hello. I'm Anne Lee from Deutsche Bank. Management team, I would like to check with you regarding Ramesh, you just mentioned that for the first half, we are looking for core business, excluding Tumi, something like the run rate of mid to single digit. Given the fact that for the second half, we have a higher base in this last year, So what is our realistic target for the full year? So that's my first question. And also, now that we have like U. S. Having around 35% or higher in terms of market share, in terms of total sales, a strong U. S. Dollar, how would it impact in terms of our net currency impact on the GP side? And also how soon can we like increase our price at the retail end? So we'd like to check with that question. And then thirdly, regarding Tumi. For Tumi, we mentioned I think like we have been talking about getting more of the wholesale business back to direct to consumers. So we have Korea already. So what about you mentioned about by the end of this year, we'll have most of the key markets that will be done. So what are these markets you're referring to? What about the updates in Hong Kong, China? And apart from that, like, is there other markets that you are in the mix in the pipeline? Okay. The momentum and the trading update that we have as of now, barring unfortunate circumstances, I see no reason why we should not be able to deliver mid single digit for the entire year as well. I'm talking about a core business. Coming back to the strong dollar. As you know that strong dollar does not affect only us, but it affects everybody else. Definitely, as we have done in the past, we do try to navigate our pricing in a manner that we protect our margins. So there would be cases where we will take selective price increases. But at the same time, there would be also cases where we will go for value engineering of our products. But overall, it will be our endeavor to maintain the margins of our brand in similar range as it is now, except for Tumi, where we still are working to improve the margins in Tumi. But our other brands core business, the margin as we looked at it remaining same as last year. Coming to, let's say, too many distribution in other markets. As I said before, Korea is already back home. Japan is already a direct market. These are 2 big markets. There are other smaller markets like London, like UK is also back home. There was a small distributor in Spain that's also back, but they were rather small in nature. There are few like in Indonesia, Thailand, they all will be with us in quarter 2, which includes China, which includes Hong Kong. So you can take it that for quarter 2, for the second half of next year, probably all the markets where we intend to operate directly will be directly operated. There could be a few smaller markets, which may still continue to be operated through distributors. They're very small ones. But all large markets by quarter 2 would be directly operated. This is move around. So we do see that there is a little bit of softness in the gateway cities again in U. S. There is less touristic arrival than what was seen in the, I would say, in the quarter 3, quarter 4 of last year. So there is a little bit of moderation now in U. S, but we at the same time see a very strong growth in Europe. So I think by now working in this industry, I tend to believe that people never cancel their holiday plans. They just choose the holiday more judiciously. So maybe the Chinese will not go to Korea because the government wants to discourage them, but they will show up somewhere else. We see very, very strong numbers in Austria, in Germany and again in Greece, they're small market. Russia, the business is booming, it's like plus 40%. I'm sure there are not that many new Russians who are buying it. It is just that Chinese also discover Russia now. So I think as long as they don't change their habit, they choose one country to another country, we would be fine. Great. Jeffrey, can you let me know whether there are any oh, no questions from online? Excellent. So, Shen in front. Hi, guys. Good morning. Shen Lee, JPMorgan. A couple of questions. Just firstly, Tumi, it's a predominant or it's a greater share of the business is direct to store, directly operated retail. I was just wondering, can you give us a sense of what the operating leverage of that business is? So in the context of 2017 where you mentioned that don't expect any operating margin expansion, what type of sales growth could you get where you would get operating margin expansion despite through operating leverage? And secondly, could you give us some guidance around depreciation just because it seems a little bit high this year, just wanting some guidance going forward? So Tumi's core business, when I use the word core, I mean is there that not the way we will look at it. You can look in for Tumi delivering a double digit growth in 2017 on account of the additional investment that we are making to push the brand out, also on account of going direct in many of the markets. So when you combine both of them together, I think we can very well look to me to deliver like mid teens kind of a growth in 2017. As I said, it's a combination of both we're going direct as well as additional A and P spend that we are committing behind this brand. In terms of the margin expansion, there is not much operating leverage. As I spelled out before, we are looking at 2 things. Number 1, there are cost synergies at the back end of the business. Part of it has already been pocketed. A big chunk of it really come about when we will be when we will implement SAP. They will be working on the same platform as us, which is today targeted at May 2017. So second part of the cost synergies will start coming in at that point of time. I think it's in 2018 that entire synergies cost synergies that we had estimated in our plan, which is about $25,000,000 yearly will be seen in our business, which will then in turn create some operating leverage. I think the big story for Tumi is we believe that Tumi is a strong enough brand combining it together with the sourcing skills of Samsonite, we should be able to move the gross margin by about 1,000 basis points. Now part of that 1,000 basis point improvement will go to fund an increase of 600 basis point on A and P. So the first savings that we get it, all of it will go in funding the additional A and P. As a result, we are guiding 2017 also. You may look at it, the margin to remain same as last year. Come 2018, when we will get additional cost synergies coming in and also the balance 400 basis point improvement in the gross margin ticking in, you will see some margin improvements into May in 2018. Great. Other questions? In the back. Hi. I'm looking at page 34. You mentioned that the industry will grow by 6.1% CAGR through 2021. What is your current market share and what is your targeted market share by then? The second question is regarding the statement here, growing popularity of outdoor and adventure sports. So besides the 2 brands that you have already, Gregory and Sierra, are you looking for other acquisitions in this space? Thanks. So the industry is expected to grow around 6%. And we see no reason why with our portfolio brand, our strength of our machine that we have, is operating in 100 odd countries worldwide, our ability to commit more advertising dollar behind our brand that we should not be able to grow faster than the market. So it's more like high single digit kind of a growth creeping up to double digit growth combining together with 2 numbers is what you should be looking at it. And what as Tim said, if you look at last year, 5 years of CAGR also, we have delivered around 12% plus growth. The similar things should be expected out of us for next 5 years as well. Now coming to the Outdoor business, we are currently operating 3 brands in outdoor segment. 1 is Hycera, which is largely an American brand. Then we have a homegrown brand, which we created our own called Extreme, which is mainly today deployed in Latin America. And then the 3rd brand that we have is Gregory, which is largely today a Japanese and American brand. I think Outdoor, we are aware, is one of the strongest growing category. But I must also say that this is one category where the distribution of this category is way different than the normal channels of distribution where our strength lies. So we are also navigating and learning the distribution channel step by step. The growth of Extreme, the growth of Gregory, both have been very, very satisfactory for us in 2016. Hycyra was a little bit disappointing. We expanded everywhere. So the message we learned was that we need to operate this market step by step because when you really get into a market, it's not only about the product. As I said to you before, the distribution is more different than the traditional distribution of luggage and business bags. Secondly, we also need to commit advertising dollar behind it. So our idea now is that we will expand Gregory in few other markets in Asia, more particularly in markets like Korea, Taiwan, beyond Japan. We will also expand HICERA now beyond Australia, U. S, most seriously in Middle East and Korea. And Extreme, as I mentioned before, it has already been launched in the was previously until 2015 was a brand which was limited only to one market, Chile, but we launched that brand in other Latin American countries, mainly Mexico, Colombia, Peru and Panama and some of the other countries with really huge success. I would say we are just starting in this segment. It is a big segment, but we want to learn as we walk. At this stage, there is no, let's say, there is no concrete proposal with us to acquire another brand in outdoor space. But I wouldn't say that we will keep our eyes closed. If something credibly presents itself, we would not hesitate to have a look at it. Okay. In the back. In the back. Thank you. And this is Angeline from Petrol Capital. I want to ask about your distribution channels and whether there is any synergy or consolidation of distribution with Tumi and if there is any synergy involved? And also about your retail channels, what's the percentage of leased versus owned properties and how is the strategy for the retail implementation? Thank you. Yes. There's no obvious distribution synergies between Tumi and Samsonite. We have no intention to sell Tumi in Samsonite doors or vice versa. But at the same time, Tumi has I must admit that Tumi has a much better and deeper understanding about retailing, much better than we at Samsonite in the past have known. So we definitely intend to leverage their knowledge of retail to the benefit of our other brands. But in terms of combining the 2 brands, it would generally not happen. That does not mean that there are we had acquired a retail chain in U. K. Largely, U. K. And Australia, and now we will start to expand its footprint to other parts of the world called Rolling Luggage, which is a multi brand, multi category luggage retail outlet, which was traditionally already selling Samsonite as well as Tumi. So I think in the airports, you may find sometimes that Tumi and Samsonite are being sold side by side. Now beyond that, there's not much intention to combine them together. But that does not mean the knowledge will not happen. As I said that Tumi does better in retail, Samsung does better in wholesale. Now when we start to look at the Tumi's business in Japan, I'm giving one concrete example there, we find that Tumi's presence in the departmental store in Japan or for that matter in Korea is far inferior to Samsonite because we have better relationship with those department stores and we know that, that part of the business much better than them. So it is definitely our intention then. We have moved few of our good people from Samsonite team who are doing that department store business in Japan and Korea to now operate the Tumi's distribution business. The Tumi traditionally knows how to run single brand retail very well, but not necessarily how to operate in the department store. And department store in many countries are still very important like Japan, like Korea, like U. K, but probably there are many other markets where it is less important. For example, in U. S, likes of Neiman Marcus, Saks and Blumeys are as important as having a single brand store. I think our experience of managing those relationship could come handy, But that does not mean the shop in shop of Samsonite will start selling to me. It will be just that we will use our knowledge and relationship with those buyers to get to me a better presence in these doors. Thank you, Ramesh. Two more questions before we end the okay, here in front, please. Hi. Three questions, please. The first question is the length of the purchasing cycle across the various categories, I. Travel, non travel? Second question is, it's very positive to see the group investing in more A and P in Tumi. The question is how is Tumi able to achieve such high profitability investing only 100, 150 bps in A and P? And the third question is profitability of e commerce at the operating profit level? Thank you. Okay. The purchasing cycle, there are no real concrete numbers there. But generally, we would like to estimate and believe that travel luggage has a replacement cycle of around 3 years. But it can get accelerated. When you launch a new collection, which is delivering consumer some great value or great design, we have seen consumer willing to come out and replace his luggage if he sees that something great is getting offered to him. So very important in our business now or increasingly important in our business is newness. In the past, I remember, we used to all believe that I worked in this business for almost 18 years during the first regime of Look who was the Chairman of the company and those days I was heading Indian business, which to say that we need to bring 20% of our collections should be new every year. And when Tim came on board, we changed that to around 33% of our collections should be new, which are based on probably once in 3 year kind of a replacement cycle. And now we are challenging ourselves, no, we want 50% of our collection to be less than a year within all our dose because that accelerates consumer's willingness to buy a new product and not wait for the old products to give way. Now non travel, on other hand, the buying cycle with whatever estimates that we make it at our end is much, much shorter, generally a year. People tend to change their everyday used bags every year because they're also more prone to following the fashion colors, fashion designs and things like that. So to that extent also, there was one reason why we have been so passionately under Tim's leadership of 11 years, growing the non travel from low single digit to now coming up to almost 40% of our sales because that does help your business. Coming to A and P spend, quite honestly, when I'm surprised, I met the previous CEO of the company. I said, what the fuck, sorry, my language is not so polite. I said, I mean, you did good numbers, but without spending anything on A and P. I think let me give the credit to them. I think they did an excellent job in terms of choosing the retail locations. And Jerome's belief was that the retail, if you have good doors and they are well merchandised, managed by motivated staff, They themselves work as billboards. And of course, you look at it, the current franchise of the brand is limited to people in the room here. All the bankers, investment bankers and the consultants, it almost become like a uniform for them. And if your boss is carrying it, when you get a new job, you want to be like your boss. That also helped the business. But we want to grow because Tumi was a great business, dollars 500,000,000 but we set a target for ourselves that over next handful of years, we see no reason to be more than $1,000,000,000 So I cannot wait only the bankers and the consultants to buy me. I need to go beyond that. And that communication cannot happen that you accidentally land up into Tumi's store in Wall Street and find out a product. I'll give you another example. Tumi has now great women bags. Just launched 2 years back, they have only one collection called Voyager, which starts to contribute to 18% of their revenue. It's a humongous number. To me, luggage sales have dropped like no tomorrow, but nobody in the world saw that because the luggage technology has changed. People want to look in for lighter luggage. They could not produce that, but the overall number never reflected that. The luggage contribution of Tumi's business from around 75% 6 year back is now down to around 30%. So they kept on losing that because of the technological impediment. Hopefully, we will cover that. But this women bag which is selling it, there's been some market research done by them where no women ever visits Tumi store to buy a bag for herself. This is one of the Tumi study, another consumer study they have done. They mostly land up in the store to buy a bag for the boyfriend or for the husband or husband or something like that. And then Orsi does accompanying her boyfriend. And she then discovers, oh, to me, there are some great women bags. Now you cannot wait for that cycle to happen. You want to shorten that cycle by going out and communicating to the consumer. The next time when a woman wants to buy a good looking business bag, which is also functional, she must consider to me as part of our brand consideration. So that is why what I would say that A and P can do to them. And then there are markets like China, Korea and Japan where the brand awareness of Tumi is still is very, very low. Tumi's sales in Japan is in single digit. When you look at it, their North American business will be around $300,000,000 plus. There's no reason and the contribution of Tumi is 4% or 5% in Japan. Therefore, any premium brand or luxury brand, the number should be more like 25% going up to around 30%, 35%. But today, the brand has not been invested in China. So if you want to wait and follow the Tumi's way of doing the business, I'm sure I will have retired by then and I don't have that much patience. We won't be lucking you. So then we have to accelerate and A and P is the way to do it. E commerce profitability. E commerce, I think long term, we'd look at it, e commerce profitability to be similar to the other channels. Today, it tends to be more profitable. But I would not like to guide anybody to look at it as e commerce contribution in our sales grow, the profitability will keep increasing. Why I say that? Because the dynamics of the e commerce is also continuously changing. So long term, you'd look at it, the e commerce growth will not be margin dilutive definitely, but it will not be margin accretive. Today, as we speak, pending that it is margin accretive, but don't start pending that over a longer term. Great. Final question from Anne here in front. A couple of follow-up questions. First, in terms of the price proposition pricing propositions of your various brands, with Revolver being acquired these days, how will you change your like price propositions, especially on the high end brand names like Tumi and also in a way Samsonite. And also like the luxury names has been talking about price harmonization like globally. So we do see the difference in terms of like a Samsonite product or a Tumi product in different markets. Are we going to change that? Secondly is regarding Tumi's core let's say excluding this like inclusion of the wholesale business, if I just look at the core business, what will be the organic growth? What will it be like? And then I forgot about my last question anyways. Okay. Price harmonization. Samsung has always been implementing what we call as a pricing index. That means the price between one region to another region or one country to another country within the same region. We do follow kind of a price index. The price index would mean that our price could have a variance between plus to minus 10%. I think that kind of a number is reasonably well accepted in our business because that's more on account of different weighty, which gets applicable in different parts of the world. Coming to the other question about the Tumi's core growth, let's say, the today, when we look at their comp ratio, which is a good numbers to look at it, the mid single digit is what we should look at it coming out of Tumi, which is very similar to the Samsonite core business. The additional growth of Tumi that I'm saying that we will get to the double digit with Tumi is mainly on account of trying to grow the business in less represented markets like Europe and Asia and also in less represented channels, which could also be U. S. For that matter, or it could be less represented category where in the past they lost market share in a very significant manner, which is in the luggage segment, which is because of the technological impediment, which they suffered over last couple of years. We believe we will be able to cover that for them and a new collection should be we should be able to bring to the market in quarter 4 under the brand Tumi. So all that put together would allow Tumi to be able to deliver double digit growth in 2017 and next handful of years. My final question is on China side. So for China, we start to see a reacceleration in terms of growth. Is it on the B2B side or on the C2C side or actually both? Yes. It's in I would say that if you look at channel by channel, so you see growth coming back in e commerce, growth coming back in B2B business. There's also a small growth starting to come back in the department stores. Department store can broadly divide them into 2 kind of department stores. The department stores which are in suburban malls, we start to see the traffic coming back. The department store, which are stand alone in the premium city centers, they are still losing market share. So I think the retail doors, which are again in the suburban malls, the department store, which are in the suburban malls, starts to deliver growth. E commerce and B2B are delivering stronger growth, but department store, which are standalone, still continue to lose some share. And the hypermarkets also still continue to see some loss of market share, share, which has actually been made good, more than made good by e commerce. Great. Thank you very much everyone for attending this results presentation. Thank you, Tim, Ramesh and Kyle for the presentation today. Thanks.