Good morning, everybody, in this lovely Malmö sunny weather day where we are reporting our second quarter report. If we go to the first slide of the presentation, we can sum up that the quarter was another quarter of profitable growth for the Thule Group. I would summarize it saying it was an okay quarter in our view. We had a 7.3% growth, 3% excluding the currency effects. If you look at it, we grew in the biggest region, Region Europe and Rest of World with 3.2%. I will come back to that we did mention already in the Q1 report that we had some phasing into sales early or late into Q1 that would impact somewhat in Q2, so I'm going to come back to that. Region Americas had a growth of 2.3% excluding currency effects.
We delivered an EBIT of SEK 558 million, which meant that we had an EBIT margin of 24.1%, so we continue to be a highly profitable company. Our net income was SEK 419 million, and the cash flow from our operating activities was SEK 431 million. A good solid quarter of performance. If we go to the next page, you can see that we look, as we always say, this is not a company that manages its business on a quarterly basis. We manage it more long-term. I therefore think it's always well worth looking at the year-to-date performance. If we look at year-to-date, we have a 6.6% EBIT. Sorry, a 10% sales growth or a 4.9% growth in currency-adjusted, we are delivering a 21.7% EBIT margin.
We have already discussed in terms of EBIT margins that we have a long-term ambition for a 20% performance. Of course the Q2 and Q3 are. Come back to what our expectations are in terms of our rolling 12 performance. Overall, a solid quarter and a strong year-to-date performance. If we look at the regions, we start with our smallest region and the one that we have had the most challenges with historically, Region Americas. We had a 2% or actually a 2.3% growth excluding currency effect, which means that year-to-date we're at a 1.1% growth excluding currency effect. What is clear is also that, we had the announcement in late May that there would be the implementation of the 15% additional tariff on Chinese imported goods, which took effect in the beginning of July.
It's clear from the feedback we have seen on retailers' purchases that that truly dented the confidence among retailers in the U.S. You can say, as we expected, we started the quarter strongly. We mentioned in our Q1 call that we had some orders that were slipping into April, and that was a strong month. May was also a good month, while June was clearly a big slowdown versus what we would have expected. If you look at that, we see mostly that being a retailer effect rather than a consumer behavior, it's clearly the case that there was an impact on retailer confidence at the end.
In addition, we have already communicated to you several times that we are in the ending parts of phasing out some low-margin OE programs. They had a negative effect in the quarter of SEK 17 million. That was a 2.6% decline in the quarter due to those. What is positive to note is that the Tepui acquisition has been very well, very smoothly, and very quickly implemented into our company. At our big outdoor show that this year happened already in June, normally happening in August, June this year, we announced to the market that we'll be rebranding those 10 Roof Top Tents to Thule globally as of next season. It's nice to note that the contribution on year-to-date has been SEK 47 million.
That acquisition, more importantly versus what Tepui was managing at an underlying EBITDA at a 38% organic growth by rolling it into the Thule Group's performance enhancing network. If you look at what we also have as a positive, aside from the strong performance of Tepui, has been the fact that our second biggest market in the region, Americas, Canada, returned to growth in the second quarter after what was blip several years of strong performance in Canada. We had a weaker Q1, but it's nice to see as we expected that it returned to growth in the second quarter. Brazil continues to perform well. Brazil is the only market in Latin America where we have team and in our own company. We are continuing to do very well in Brazil. That's very nice to see as well.
What is a more challenged reality in Latin America is almost all the other markets, especially Argentina, Chile, and Mexico, which are big markets, have a tough economy. There is quite a lot of instability. We did see some sales declines in Latin America also in Q2. When I summarize the quarter and year-to-date, more importantly, I can see that Canada and Brazil are doing well. We have some challenges in some of the smaller markets in Latin America. We continue to have a relatively shaky reality with U.S. retail. We're more positive in terms of consumer confidence than maybe the numbers were for the second quarter for U.S. because we believe it's mostly a retail-oriented worry. We, of course, need to see that confirmed in true sales growth in the coming quarters.
If we look at the bigger region, Europe and rest of world on next page, you can see that the headline says year-to-date performance very strong despite a slower Q2. I think it's very important to remind you what we actually stated on our quarter one call, where we pointed out that we have seen a early spring sales phasing of our single biggest category, bike carriers, into March. We mentioned that that would impact clearly our Q2 sales. We mentioned endless number of times that we will not judge the company on a quarterly performance. We will see, due to earlier spring weather or later spring weather, sometimes a shift between weeks which impact exactly around quarterly closes.
That was an impact that would have reduced roughly 2% our sales growth in quarter one, and thereby roughly increased it with about 2% in quarter two. In a true comparative way, it would be more an 8% growth in quarter one and a 5% growth in quarter two. Year-to-date, we're at 6.3%, excluding currency effects, which we still feel is a very solid and strong performance. We're delivering that performance despite that we did see some headwinds in some markets. Most markets actually in the region are doing really, really well, but we have clear headwinds in the Nordic and Russian markets.
In the Nordics, it's related to a number of major retailers that have been going through some challenges and quite a lot of reorganizations and other things, and maybe not necessarily focused as much as we would have loved to on driving sales in our categories. In Russia, it's related to a general shaky situation in the financial markets and in some of the retailers there with some of our customers. In the Nordics, we also on top of that, have had a very tough comparables because as we have mentioned a few times during 2018, we had a very large roof box campaign with a major car brand that had heavily PR and media and advertising for a campaign where if you bought one of their four-wheel drive cars, you also got a roof box from Thule included in that purchase.
That drove significant volumes that specific year, therefore makes also a very difficult comparison. We believe Nordics will pick up in the second half of the year, while we have to say that difficult to say how Russia will behave as a market in the second half. The other challenge we had in the quarter was that we are now doing a completely new generation of roof racks. We estimated when we went into that very large project that we would see some pipeline effect while we saw distributors and retailers selling out and therefore reducing their stocks of older models before bringing in the new one.
We have to say now that when we are nine months into these three phases of launches, with the first phase done and two phases just to come, that we probably have underestimated the stock levels, both at major international distributors, but also out in retail, how much of the older generation roof racks they have. The roof racks are out of our Sport&Cargo Carriers products, the most easy to stock up in a store or in a warehouse. They're quite space efficient, while the bike carrier and the roof box are not. Clearly, we have underestimated that has impacted our first half of sales.
We definitely expect to see that improve in the second half of the year as we now see and get confirmation from our distributors and customers that they have depleted for the phase one, and they're starting their depletion for the other phases. A pickup definitely in the second half of the roof racks and going into 2020 as well. The third matter in terms of impacting the quarter rate of growth, which is still a very solid growth, but slightly lower than Q1, was that we, as expected, finally did see the pipeline cool down in RV products from the OE manufacturers. If you would look at registration and purchases of RVs from a consumer perspective. That's still doing really well in Europe, but there has been a pipeline that needed to be cleansed. This has dragged on much longer than we thought.
In fact, strong sales performance all the way until Q2. If you look at some of the reports of some of the companies in the RV sectors like the French Trigano and others, you will have heard them already mentioning that for the first quarter, we're really seeing manufacturers in Europe reducing inventory levels and production, therefore impacting sales. That's only a minority of our sales to RV products luckily, so we are not seeing the same type of effect, but it did slow down, and more importantly here, we have to mention, as has been presented by others as well, that the European RV manufacturers are now both doing a pipeline depletion of the older models they have, which is really good.
It's a good cleansing, but they're also struggling a little bit as all indications are for Q3 to get new chassis with the new motor and models that are approved for driving in various conditions, the Euro 6d engines, so to speak. There is a struggle for the motor home manufacturers to get enough chassis. We will probably see a weaker Q3 whereafter a pickup in Q4 and beyond because consumer interest in acquiring these motor homes is still very strong. If we then talk about the positives because as you would expect, there's a number of positives, and one of them is that we continue to grow well in our active kids categories, where both our multi-sport trailers and strollers continue a very strong development. We did see some challenges in the smallest of the three, the child bike seats.
One of the markets, the Netherlands, which is the biggest, has had some very price-aggressive competitive offers, which has dented a little bit, and we have in the quarter lost some market share. We're convinced that our market-leading, test-winning product will gain back in the future, but this did truly impact some market share in Holland in Q2. Then finally, if we look at packs, bags, and luggage, the growing categories, luggage and sport bags developing really nicely and continuing a solid growth as we are hoping and targeting for. Overall, if you look at it once again on a regional progress, year to date is 6.3% growth excluding currency effects. Taking into account the phasing we already mentioned in our quarter one reporting, it is more fairly an 8% roughly growth in quarter one and a 5% growth in quarter two performance we have.
With that, I leave it to Lennart to go through some of the balance sheet matters.
Thank you very much, Magnus. Starting with slide six, the income statement. You see that the gross margins were down in the second quarter, FX adjusted versus prior year with 0.7 percentage points. The decrease is driven by the negative effect from the Chinese tariffs for our U.S. purchases, equivalent to 0.2 percentage points, and an under absorption hit in our production due to the lower production volumes. Our SG&A expenses is higher than prior year in absolute numbers, but if we exclude the negative currency effect and the fact that we acquired Tepui in December last year, the organic increase in the quarter is only SEK 5 million, despite the continued product development push and promotional initiatives primarily for the new categories. Financial net, minus SEK 10 million versus prior year minus SEK 13 million. External borrowing costs, slightly lower than prior year.
This year, we are also negatively affected by the new IFRS 16 accounting rules with SEK 2 million extra in our financial expenses this quarter due to that. On the other hand, we had a one-time cost prior year when we put a new financing in place, an amount of SEK 4 million. As you can see on the right-hand side, we have a very little effect on our income statement due to IFRS 16 as we commented on the last quarter. Effective tax rate for the quarter is 23.4%, and year to date we are at 23.2%. Nice to see that the tax rate is slightly going in the right direction. If we take slide seven, looking at the operating working capital and cash flow.
You see that in the quarter we ended with SEK 1.7 billion in operating working capital, which is 25.3% of sales versus prior year, 24.3%. Inventory levels are at higher levels than our plans, especially due to the weaker sales here in June. You should also notice that out of the currency-adjusted increase year-over-year by SEK 170 million in inventory, almost SEK 50 million are connected to the impact of the U.S. tariffs and actually also the acquisition of Tepui. We expect inventory to be reduced in Q3. That means that we had a positive cash flow in Q2 as expected, and we reached SEK 471 million this quarter versus SEK 341 million prior year, and year to date we are now at SEK 396 million in cash versus prior year, SEK 272 million. Thank you very much.
Thank you, Lennart. If you look at our performance versus financial targets, you can see that excluding the Tepui acquisition and currency effects, we are at a 3.7% growth. We are on a rolling 12-month basis at a 17.9% EBIT margin, and we have a leverage of 1.8 times in terms of net debt to EBITDA. As we already announced, there was an 86% dividend approved by the AGM this spring. Overall, some challenges on the growth, but otherwise a strong performance on profitability as well and cash flow. If you look at the months coming ahead and what we're focusing on the last slide, you can really say simply as you would expect at this time of year, we are in a very strong sales and marketing focus.
We are having a lot of exciting projects that we are driving for our long-term profitable growth. If you take sales and marketing, it's obvious that there is a lot of attention at the moment, especially if you look at some of the more shaky situations like in Latin America and in the U.S., but also in the markets where we're doing really well, that there is a lot of work working with retailers as we are in the peak summer season in helping them to sell through our products in various ways. We also are prepping for some in-store launches that are happening at the very beginning of quarter four. We're ramping up production of, for example, the Thule Vector, a completely game-changing roof box in the premium segment that is coming in the very beginning of quarter four.
We will also do phase 2 in our new roof rack generation that is coming, quickly thereafter, phase 3 at the very beginning of next year. That's of course a big focus as we speak. Also happy to see the broadening of our luggage portfolio, where we now will launch our third full luggage collection, the Thule Crossover 2, with spinners, carry-ons, check-in bags, duffels, et cetera, which is hitting the market in quarter four this year. A lot of new products hitting stores in the end of the year. Of course, as we are in a number of product chapters, the image shows one of those fairs and events.
This was from the OutDoor by ISPO event in Munich some weeks ago, where we are in the midst of going to all those fairs to show the 2019 product offer in what we will show to the market. There, of course, we will be bringing the now Thule branded Roof Top Tents globally in 2020. If you are a keen observer, you will see quite a few new bags also in that image that will be hitting the market in 2020 as well. We also, of course, do a lot of things in a pure operational way the coming months. We have a very high focus on delivering on time in full.
As we did end June with slightly higher inventory due to the drop in sales in the last few weeks, we are very confident that we will be able to deliver on a very high on time in full to our retail customers. We are in the phases of finalizing our global roof rack plant in Sweden, the investment for those final roll up for the second and third phase of the new roof rack generation.
As you know, we have done a number of major projects in our sites over the last 18 months, what will be a key for our ability to deliver strong profitability in the second half of the year and beyond is of course, that we are now seeing some of those efficiency gains of those investments and changes in layouts, et cetera, we've done in the plants, which were really done late 2018 and early 2019. We will see some pick up some of those effects in those plants in the second half. As always, you never know with the raw material market, we expect with everything we see and all the numbers where they are and trending purchase prices, that we will see some positive tailwind helping us in the second half of the year.
On top of that, you can rely and trust us that we are very clearly continuing our long-term ambition and focusing a lot on an aggressive product development push for both 2020 and beyond. In the report, I did mention one of those key new project is the presentation at the fairs this autumn, then the roll-up next year of a third stroller model that will be hitting. It's one of those many examples. With that, we leave it for questions.
Ladies and gentlemen, if you'd like to ask a question, that's star followed by one on your telephone keypad now. The first question from the phone lines today comes from Peter Reilly from Jefferies. Peter, your line is now open.
Good morning, gentlemen. Can you give us a bit more color on what's happening with the Sleek? You haven't really talked about the Sleek in the presentation and in the report. You talk about the importance of the new third model coming, I guess, at Kind + Jugend in September. I get the impression overall, you're a bit behind where expected to be on Sleek, and previously you talked about the first year being a sort of consolidation year with maybe an acceleration in the second year because you start to get word-of-mouth referrals, and we're only a couple of months away from the anniversary of the launch. Can you help us understand what's going on, whether you're ahead, behind, and what you see coming, as the model gets more established in the marketplace?
Good morning, Peter. I can. We are behind what we would've liked to be, you're getting the signal right there in your overall understanding. We are, of course, growing very fast, as you would expect, since we didn't sell it before. We are, in some of the regions, doing very well, both in terms of listings that we're getting it into and sell-through in those listings, while in others, we are not getting the same traction as we would have wanted. That doesn't mean, luckily for us, that retail is as frustrated as we are with our sales numbers. They're actually more saying that that was in line with what they would've expected and seen for a newcomer in a city stroller segment. Maybe it is us being slightly too overambitious and/or over-positive in us feeling that we're not fully up to track.
We are a bit behind where we would've liked to be. Despite it developing very strongly month-over-month growing, it's not growing as fast as I would've liked. That's also why we're mentioning a lot of the feedback from those retailers where we are feeling like we would want to see more sell-through than they are happy with, is their reference, and that's why we are mentioning the importance of a third stroller, the second stroller of a more typical city strolling type of reality. They're just saying that the brand has to be out there more, and the more models you have, the more names you get out there. Every new stroller sells two more strollers nine months later on, so to speak, when people have seen them and plan for them. That, I think, is a valid point on getting more space.
We have had an army of one in a jogging stroller, but really we have an army of one in terms of city strollers at the moment with the Sleek. We will add them an army of two, hopefully combining that with a good pickup is what we're hoping for. We're slightly behind plan. That's the fact.
Is the main issue not so much what consumers think of the product? Is more a case of getting listings with retailers? You also mentioned in your report that you've seen, I guess, what's maybe a heightened level of competitive activity with more new products coming out from a competitor. Is it mainly a listings issue or because the retailers want to have a wider range, or is it also a competitive issue where consumers have got maybe a slightly wider choice than you anticipated 6, 12 months ago?
It's a combination of both, I would say, because in some countries we have got fantastic listings and distribution and fantastic sell-through. In some countries, we have got good listings, but not enough sell-through, and in some countries, we haven't got enough good listings. It's a little bit of a combination of all factors, and the reason I do mention the fact that there has been a very significant amount of activity, and that was to be expected. 18 months after buying Bugaboo, you would expect them to come with new strollers and do more aggressive marketing activities and other things to gain back some of the momentum they lost than there are some other brands that have done some good stuff as well. I think it's a positive growth. We're doing really nicely. We're just not doing as nicely as we ambitiously had hoped. That's the reality.
Okay. If I can switch tack and ask about Sport&Cargo Carriers , and particularly bicycle carriers in the U.S. You've been talking about the impact of the U.S. tariffs, and you were talking previously about one of your fears being that bicycles would become a lot more expensive because of the tariffs that would hit your roof rack sales. The tariffs are now here. Are you getting any indications from your channels about what you think might happen to bicycle sales and hence bicycle rack sales as the tariffs hit, Thule?
You can say that if you look, there is a statistics official in the U.S. which is partly only covering actually bike sales. It's all the independent bike dealers in the U.S. have a wholesale organization where they track exactly the number of bikes sold in that channel. Nowadays, you have to acknowledge there is also bikes sold in more online and other realities that aren't fully captured. It's not 100% correct mirror of the bike industry overall, but it is the best statistics that is relatively readily available. We have to say it was a very negative Q2 where we had May was 15% down in bike sales versus May last year. May last year wasn't fantastic either, to be honest.
In that channel, which is the hardest hit channel, because there they do the more expensive bikes, it has had a very tough ending of the spring, especially May and June were not strong at all. There are some pickup in other channels, but generally the bike category in the U.S. is one of the ones actually used as an example in various presentations towards U.S. government on what the tariffs does impact in terms of retail sales for consumers. Luckily, we are not doing nearly as low as that, I can tell you, but it is still because there is, as I said, some pickup on direct-to-consumer sales and other channels which aren't captured in these statistics.
Okay. Lastly, you were talking already in the third quarter last year about the potential impact of the new roof rack range, where you thought there might be some excess inventory, which would take time to clear out. We're obviously 9 months later now, and you've been taken a bit by surprise. What's happened over the last 9 months that firstly, you got taken a bit by surprise, and how confident do you feel you've got a handle on what's going on? I guess it must be very difficult to work out what's out there when you've got lots of small retailers, but I'm slightly surprised that you're surprised at the issues cropping up now, and I'm wondering what your real visibility is like for the second half.
If you look at it, we have 35,000 doors in the end. What I think is the case here is that these have relatively low value per unit if it's a specific adaption of a model, for example, for a specific car. They might not even have always disclosed those things for us in details, and they wouldn't have. What we have, it's not significant percentages here, I want to point that out. But it's a few percentage points on a large category like roof racks, makes a lot of dent in your growth ambition. It's not like we've seen huge drops or anything. It's just slightly lower than we would have expected. That slightly is a lot of money if it's roof racks.
We see from our order patterns for the second half of the year for the major distributor markets, we see all the indications having dug deeper with a number of these shops, that we will see a pickup in the second half already. Which means that the majority of the cleansing has already happened. There is some cleansing going on now for the second and third phase, as we already mentioned we were expecting, and we have now taken a more conservative expectation on how long those cleansings will be. Despite that, due to the size of the first launch, we are confident that we will be growing in roof racks in the second half of the year.
Okay. Great. That's very helpful. Thank you very much.
Okay.
Thank you for that. We now have a follow-on question from Fredrik Moregård from Pareto Securities. Fredrik, your line is now open.
Good morning, everybody. A couple of questions from my part. We touched upon it just briefly with Peter's question, returning to inventory and your visibility with regards to that, I was also a bit surprised of your visibility into dealer inventories. How are you working with dealers to ensure that you have a correct or as a correct view as you can on what inventories they're having?
Yeah. We have presented, I think all along, every single time we've discussed about inventory clarity that for major international large chains, we have a very good see-through on inventory levels. If you take any of the major U.S. customers, we even have their sell-through data, so we have an exact situation on where we stand. When it comes to all the smaller distributor countries, we are number one in roof racks in the entire world, in 140 countries. It is the category we sell most spread geographically in all those 140 countries. What we don't have is a dealer detail in countries where we go via distributors to a lot of small dealers in Chile, Taiwan, Philippines or anything like that.
As we're mentioning, it's not in the markets where we are forward integrated that we've seen this effect, and we're honestly only talking about a few percentage points here. It's not like we completely guessed wrong, but a 1% or 2% growth not happening is, of course, significant. Honestly, if you look at inventory holdings in all major international large customers in all the forward integrated markets, very good understanding what the inventory levels are. As we've openly said numerous times, in small, far away distributor-led countries, we do not have that detail or clarity.
Okay, great. That's helpful. You also touched upon the order book indicating that you will have sort of a turning situation in the second half of the year. How far ahead can you see with regards to your orders and how reliable are these order books?
Once again there, it's the same thing there. For the major international large customers that dominate our sales, we are in forward integrated markets where honestly, our order book is one or two weeks out. For the international distributor countries, if we're going to ship a full container load of something to a Chilean distributor, a Filipino distributor, we of course want to work with them to do that, both as cost efficiently and as environmentally friendly as possible by packing full containers, which means we plan much further ahead to discuss exactly how many bike carriers, how many roof racks, et cetera, in a much longer planning horizon, because we want to make sure that happens. If you look at our order books for the majority of our sales, extremely short, because we are a next day delivery to retail in all the major countries.
If you look at our order book for those markets that we specifically were taken by surprise for the roof racks, there we have a longer order book, which is why I can say that we see a much better order book specifically for those markets where we were surprised so far on roof racks.
Okay, that's helpful. Moving over to Tepui. You mentioned that you will do the rebranding of Tepui to the Thule brand in 2020.
Yeah.
You say that it will be a global rollout. I was curious to know about what global plans you have for the brand or for the product. Are you able to gain any new listings outside the U.S. for this product category?
Of course, we have said a few times that this is a relatively niche product in every country, but specifically it has some major volumes only really in North America, Australia, and South Africa. There is a niche market opportunity in lots of other countries. You have Swedes buying these products, you have Germans, you have Koreans, you have Japanese. There is, of course, a small volume in a lot of countries. Our plans are therefore that the majority of sales will definitely come from the U.S. and North America still going forward. Having a very cost-efficient ability to distribute this product into other countries, we will be differently from what Tepui ever could do, able to offer this product to a number of markets, and therefore grow more than we would if we only concentrated to North America.
It will not have a significant impact on our growth numbers, but it will be a nice addition in bringing a limited assortment. We will not offer all the models that we offer in North America because it would not make sense for a market where we might sell 50 or 100 of it. It will be a more curated assortment than we offer in North America, but that curated assortment will start hitting the markets as of February 2020 under the Thule brand.
Okay, interesting plans. Lastly, on the Thule Revolve, how is that product developing in the Americas and in Europe, rest of the world compared to your expectations? Are you still seeing positive spillover effects for the Thule Subterra you talked about having a number one in that category also before?
Yeah. If you look at Thule Revolve, that is developing to our plans, which is very positive to see. It is helping still to drive sales of Thule Subterra as well. In then the addition of coming now with a third, we are hoping, of course, that there will be a recognition factor of seeing more and different levels of different versions, so to speak, of luggage with the Thule brand on it. That one is developing very well according to our plans.
Okay. Does that mean that you're seeing actually growth in pack bags and luggage in Americas?
Yep. If you look at luggage, we're seeing fantastic growth. Then as you know, in Americas, we both have some OE very basic bags, and we have a relatively large legacy. If you look at luggage, we see a very big growth in Americas as well.
Okay. positive for the category as a whole.
Yep.
Okay. Thank you very much. That's all for me.
Thank you. We now have another question from Gustav Sandström from SEB. Please go ahead. Your line is now open.
Thank you. Good morning, guys. Sorry for being a little bit late into the call, so apologies if you already answered this. My question relates to raw materials. Did you mention the impact, if it was positive or negative in the quarter, year-on-year to your margins from raw materials? Is it a fair assumption there should be a material impact on a positive matter for the remainder of the year? Thanks.
We didn't go into deep detail on the second quarter, but it was flat-ish, and you're 100% right, it will help us definitely in the second half of the year.
Perfect. Looking at mix, how much of a mix impact did you have from sort of new product launches this year? Should we see that also being sort of a second half story where you have a lot of new launches coming into the market, sort of Q3, Q4 this year? Could you please elaborate a bit on this?
Yeah. If you mean the mix impact in terms of average margin, there is a lot of factors, of course, in margin happening. Generally, you would say that a lot of our new products are high margin products, but also it's always comparable to other high margin products, maybe in a different category. A total mix there. I think most people realize, for example, if we're not seeing the same growth we would have liked in roof rack, that's not going to be great for our gross margin. I think most people realize that being the undisputed global market leader, we have a pretty thick gross margin in roof rack. There are effects like that also playing in.
Generally, if you look at mix effect, one that is obvious is of course, as we are phasing out some low margin OE business and they are starting to disappear, and as we unfortunately have to realize that some of our legacy categories in packs, bags and luggage will continue to decline and are declining. They are low margin. Hopefully with some of the other things not happening, if we do pick up in roof rack, et cetera, it should help our gross margin in that sense also for a mix effect.
Yeah, I was mainly referring to perhaps some price increases through the new product categories and the renovation of the roof racks. I get your answer there. That's all from me. Thank you.
No more questions, I assume, operator.
Sorry there, my line was on mute. We now have a question from Daniel Schmidt from Danske Bank . Please go ahead.
Yes. Good morning, Magnus and Lennart. Sorry, I was sort of kicked out of the conf call, I might have missed this, the situation in the European RV that you write about and that we also heard about yesterday from Dometic, again, you might have mentioned this, did you continue to grow in the quarter despite what happened in the market? What are you seeing going into the third quarter?
Yeah, small growth in the quarter. Still growing, small growth though, mostly driven in by the fact that we sell major share to a dealership structure and not to manufacturers, which is a small part of our business, because the manufacturer part wasn't growing in the quarter. If you look at it, due to the Euro 6d engine chassis issue, they're not getting chassis enough from Fiat and others at the moment to be able to manufacture as many as they would want of the new type, which I think personally might be only good for the industry because they're going to cleanse out better the pipeline of the old types, which is necessary. That will definitely impact the whole category in Q3.
I hope still that we will be able to at least be flat or ideally some small single-digit growth, it's going to be a tough Q3. Once they start to get those chassis, there will have been a pipeline depletion effect because already this quarter and next quarter, there will be more purchases of RVs by consumers than there will be manufacturing. Very differently from the U.S., where there was an absurdly high pipeline fill. Here, it was high, but not as absurd. These two quarters alone will definitely be quite a lot in bringing it in line, while already Q4 should hopefully be picking up a bit, but definitely from 2020 beyond.
Okay, thank you. You're basically saying that, of course, you probably had a fairly good start to the quarter, and then it sounds like you were flattish towards the end in your business, and that's where you enter the Q3. Is that fairly well understood?
Yeah, it's a good interpretation. Yeah.
Thank you, Magnus.
Thank you.
Our final question comes from Peter Reilly from Jefferies. Please go ahead, your line is now open.
Morning. Just to follow up, if I may. If I take you back to the capital markets day, at the time you were saying, if I recall correctly, that you saw near-term faster growth opportunities in strollers, medium-term luggage was a bigger market, but was going to be slower to take off. If I look at what's happened since then, the impression I get is that you've become a bit more cautious about strollers and a bit more optimistic about luggage. You haven't given us the actual growth numbers for the precise categories, is it fair to say that you're getting structurally more optimistic about luggage and a bit more cautious or less bullish about the stroller category?
I wouldn't say that on the long term. We always said it would mean a number of stroller models and a number of collections in luggage and a longer period of time. I haven't changed my overall opinion. I think we're coming with a cracking new stroller that we'll be presenting at the fairs this autumn that I'm sure will drive volume. In general, we are showing strong growth both of the previous launch Thule Urban Glide stroller and of the Toddler. It's not that I've changed my overall opinion on total long-term plan in strollers. I'm convinced that we will get consumers to pay for our strollers and win share there over time. Not an overall change, but sometimes it goes slightly faster, some quarters slightly slower, some others. If you look at luggage, same thing there.
I do not change my mind in terms of underestimating some of the huge behemoths of the Samsonite Group and all the money from the LVMH Group behind RIMOWA and lots of up-and-coming direct-to-consumer brands like Horizn Studios and Away and others. Luggage is a huge category, but it is a very challenged category, and it takes time to get into retail. I'm still confident that we will have some countries where we are incredibly successful in luggage and some where we will be okay and some where we will be mediocre to embarrassing, all within a few years' time. I haven't really changed my mind there. I think some collections will pull, some will not. It's going to be a bumpier ride over a few years. I'm convinced of both of them, actually.
In terms of a global success, there is a higher likelihood that that will be the strollers, but that is a significantly smaller cap.
Lastly, an unfair question, I apologize in advance. You talked earlier in the year about having a much stronger second half because of the timing of product phase outs, new products coming through and so forth. Obviously you've had a pretty weak development towards the end of Q2, and you've now got quite a few headwinds, I think, going into the third quarter. I guess you must be a bit less positive about the growth in the second half of the year and in particular in the third quarter than you were earlier in the year.
I'm still convinced that the second half of the year is our stronger and more balanced year in 2019 than it has been historically in the last few years in terms of growth during the year. There are a lot of logics due to what we're launching and when we're launching that we should see a more balanced growth throughout the year. That opinion hasn't changed, actually. We see some very good products that we're launching. What you are right with is that it is erratic a little bit in the U.S. with the tariff announcement and what it does to consumer confidence. We don't really know yet. Far, it's mostly retail confidence. In that sense, you're right that there is maybe one more worry on it.
Otherwise, I'm still positive that the second half of the year is a strong half of the year of growth for us.
Okay. Well, I look forward to seeing the new stroller model in September. Thank you for answering all the questions.
Thank you very much.
Thank you for that. As a reminder, if you want to ask any further questions, please press star followed by one on your telephone keypad.
As there seems to be no additional questions, I know you're all incredibly busy with all the reports coming out, and I know you will be incredibly busy using Thule products through your vacation period. I truly look forward to having a catch up with you after the Q3 reports and wish you a great summer. Thank you.