Good morning, everybody, in this lovely, mild, sunny weather day, where we are reporting our 2nd quarter report. And 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 Thales Group. I would summarize the saying that it was an okay quarter in our view. We had a 7 point 3% growth, 3% excluding the currency effects. And if you look at it, we grew in the biggest region, Europe and Rest of World with 3.2%.
And I will come back to that we did mention already in the quarter one 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 FX. We delivered an EBIT of CHF558 1,000,000, 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 4.19 million, and the cash flow from our operating activities was SEK 431,000,000. So 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. And I, therefore, think it's always well worth looking at the year to date performance.
And 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, and we are delivering a 21.7 percent EBIT margin. We have already discussed in terms of EBIT margins that we have a long term ambition for a 20% performance. And of course, Q2 and Q3 are going to come back to what our expectations are in terms of our rolling 12 performance. But overall, a solid quarter and a strong year to date performance. If we look at the regions and 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 effects. But 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. And it's clear from the feedback we have seen on retailers purchases that, that truly dented the confidence among retailers in the U. S. And 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 and effect rather than a consumer behavior, but it's clearly the case that there was an impact on retailer confidence at the end of the year. 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, and they had a negative effect in the quarter of SEK 17,000,000. So that was 2.6% decline in the quarter due to those.
What is positive to note is that the the PUI acquisition has been very well, very smoothly and very quickly implemented into our company. And 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 rooftop tents to Thule globally as of NextSeq. But it's nice to note that the contribution year to date has been SEK 47,000,000. That acquisition, but more importantly, versus what Tepui was managing as an unentited as 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 Tufuvi has been the fact that our 2nd biggest market in the region, America, Canada, returned to growth in the Q2 after what was blipped 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 Q2. Brazil continues to perform well. Brazil is the only market in Latin America where we have our own sales team and our own company, and we are continuing to do very well in Brazil. So that's very nice to see as well. What is a more challenged reality in Latin America is almost all the other markets, but especially Argentina, Chile and Mexico, which are big markets, has a tough economy and there is quite a lot of instability.
And we did see some sales declines in Latin America also in Q2. So 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, and 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 Q2 for U. S. Because we believe it's mostly a retail oriented worry, but we, of course, need to see that confirm in true sales growth in the coming quarters. If we look at the bigger region, Region Europe and Rest of World on next page, You can see that the headline says year to date performance very strong despite the slower Q2. And I think it's very important to remind you what we actually stated on our quarter 1 call, where we pointed out that we had seen a early spring sales phasing of our single biggest category bike carriers into March.
And we mentioned that, that would impact clearly our Q2 sales. And we mentioned endless number of times that we will not judge the company on a quarterly performance and that we will see due to earlier spring weather or later spring weather sometimes a shift between weeks, which impact exactly around quarterly close. That was an impact that would have reduced roughly 2% our sales growth in quarter 1 and thereby roughly increasing with about 2% in quarter 2. So in a true comparative way, it would be more an 8% growth in quarter 1 and a 5% growth in quarter 2. Year to date, we are 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. And in the Nordics, it's related to a number of major retailers that have been going through some challenges and 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. And 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 4 wheel drive cars, you also got a roof box from Sunnolift included in that purchase.
That drove significant volumes that specific year and therefore makes also 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. And 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 9 months into these three phases of launches with the 1st phase down, done and 2 phases just to come, that we probably have underestimated the stocking levels, both at major international distributors, but also out in retail, but how much of the overdue generation roof racks they have.
The roof racks are out of our sports and cargo carrier products and the most easy to stock up in a store or in a warehouse. They're quite space efficient, while a dining carrier and a roof box are not. So clearly, we have underestimated that, and 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 started they have depleted for the Phase 1 and they're starting their depletion for the other phases. So a pickup definitely in the second half of the ruprax and going into 2020 as well.
The 3rd 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. So 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.
But if you look at some of the reports of some of the companies in the RV sectors like the French Trigonal and others, you will have heard them already mentioning that for the Q1, we've really seen manufacturers in Europe reducing inventory levels and production, therefore, impacting the sales. That's only a minority of our sales to our 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 models that are approved for driving in various conditions, the Euro 6d engines, so to speak.
There is a struggle for the motorhome manufacturers to get enough chassis. So we will probably see a weaker Q3, where after a pickup in Q4 and beyond because consumer interest in acquiring these mushrooms 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 kit categories where both our multi sport trailers and strollers continue very strong development. We did see some challenges in the small smallest of the 3, the child bike seats. And one of the markets, the Netherlands, which is the biggest, has had some very price aggressive competitive offers, which has dented a little bit.
We have in the quarter lost some market share. We're convinced that our market leading test winning product will gain back the future, but this did truly impact some market share in Holland in Q2. And 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. So overall, if you look at it once again on the region, Europe as well, year to date is 6 0.3% growth excluding currency effects. Taking into account the phasing we already mentioned in our quarter 1 reporting, It is more fairly an 8% roughly growth in quarter 1 and a 5% growth in the Q2 performance we have.
And with that, I leave it to Lennart to go through some of the balance sheet, Magnus.
Thank you very much, Magnus. So starting with Slide 6, the income statement. You see that the gross margins were down in the 2nd quarter, FX adjusted versus prior year with 0.7 percentage points. The decrease is driven by the negative effect on 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 and 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 SEK5 1,000,000 despite the continued product development portion commercial initiatives primarily for the new categories. Financial net, minus SEK 10,000,000 versus prior year minus SEK 13,000,000. External borrowing costs slightly lower than prior year. This year, we are also negatively affected by the new IFRS 16 accounting rules with SEK 2,000,000 safe extra in our financial expenses this quarter due to that.
On the other hand, we had a onetime cost prior year when we put the new financing in place in the amount of SEK4 1,000,000. So 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 percent and year to date, we are at 23 point 2%. So nice to see that the tax rate is slightly going in the right direction. If we take Slide 7, looking at the operating working capital and cash flow, you see that in the quarter, we ended with SEK1.7 billion in operating working capital, which is 25.3 percent of sales versus prior year, 24.3%.
Inventory levels are set 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 117,000,000 in inventory, almost SEK 50,000,000 are connected to the impact of the U. S. Tariffs and actually also the efficiency. We expect inventory to be reduced in Q3.
That means that we had a positive cash flow in Q2 as expected, and we reached SEK471 1,000,000 in the quarter versus SEK 341 1,000,000 prior year. And year to date, we are now at SEK 396 1,000,000 in cash flows prior year SEK 272,000,000. Thank you very much.
Thank you, Lena. So if you look at our performance versus financial targets, you can see that excluding the Tukui acquisition and currency effects, we are at a 3.7% growth. We are on a rolling 12 month basis at a 17.9 percent EBIT margin. And we have a leverage of 1 point 8 times in terms of net debt to EBITDA. And as we've already announced, there was an 86% dividend approved by the AGM this spring.
So 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, and 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 tension at the moment in 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. But 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 4. So we're ramping up production of, for example, the Tullufector, a completely game changing roof box in the premium segment that is coming in the very beginning of Q4. We will also do Phase 2 in our new roof rack generation that is coming and then quickly thereafter Phase 3 at the very beginning of next year. So that's, of course, a big focus as we speak. And also happy to see the broadening of our luggage portfolio where we now will launch our 3rd full luggage collection that's in the Crossover 2 with spinners, carry ons, check-in bags, duffels, etcetera, which is hitting the market in quarter 4 this year.
So a lot of new products hitting stores in the end of the year. And then, of course, as we are in a number of product categories, and the image shows one of those fairs and events. This was from the Outdoor Istvo 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 market. And there, of course, we will be bringing the now Thule branded rooftop tents globally in 2020. And 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 in the coming months. We have a very high focus on delivering on time in full. And of course, as we did end the 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 and full to our retail customers. We are in the phases of finalizing our global roof rack plant in Sweden, the investments for the final rollout 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 and 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, etcetera, we've done in the plans, which were really done late 2018 early 2019.
So we will see to pick up some of those effects in those plans in the second half. As always, you never know with the raw material market, but we expect with everything we see and all the numbers where there are and trending purchase prices that we will see some positive tailwind helping us in the second half of the year. And 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. And in the report, I did mention one of those key new projects is the presentation at the fairs this autumn then the roll out next year of a third stroller model that we'll be using. It's one of those many examples.
So with that, we leave it for questions.
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 SEEK? You haven't really talked about the SEEK in the presentation. And in the report, you talk about the importance of the new model coming, I guess, at Kinderhooked in September. And you I get the impression overall you're a bit behind where expected to be on Sleep.
And previously, you had talked about the 1st year being a sort of consolidation year with maybe an acceleration in the 2nd year. Could you start to get word-of-mouth referrals? And we're only a couple of months away from the anniversary of the launch. So can you help us understand what's going on, whether you're ahead, behind and what you think what you see coming as the model gets more established in the marketplace?
Yes. Good morning, Peter. Yes, I can. We are behind what we would have liked to be, which so 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.
And 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 have expected and seen for a newcomer in a city solar segment. So maybe it is us being slightly too overambitious or over positive in us feeling that we're not fully up to track. But we are a bit behind where we would have liked to be despite it developing very strongly month over month growing.
It's not growing as fast as I would have 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 3rd stroller, the 2nd stroller or the more typical 60 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 2 more strollers 9 months later on, so to speak, when people have seen them and plan for them. And that, I think, is a valid point on getting more space. We have had an army of 1 in a jogging stroller, but really we have an army of 1 in terms of city strollers at the moment with Teleflex. We will add them an army of 2.
And then hopefully, combining that with a good pickup is what we're hoping. But we're slightly behind plan,
the fact. And is the main issue not so much what consumers think of the product is more a case of getting retailers. Because you also mentioned in your report that you've seen, I guess, what's maybe it's a heightened level of competitive activity with more new products coming out from a competitor. So 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 to 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 got enough good listings. So 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, I don't know, 18 months after Vey and Volkswagen, 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.
And there are some other brands that have done some good stuff as well. So I think it's a positive growth. We're doing really nicely. We're just not doing as nicely as we ambitiously have hoped. That's the reality.
Okay. And if I can switch back and ask about sports and 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 reef rack sales. The tariffs are now here. Are you getting any indications from the your channels about what you think might happen to bicycle sales and hence bicycle rack sales as the TAF set, I believe?
Yes. You can say that if you look, there is a statistics official in the U. S, which is partly only covered actually by 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. So it's not 100% correct mirror of the bike industry overall, but it is the best statistics that is relatively available. And we have to say it was a very negative 4:2 where we had May was 15% down in bike sales versus May last year. May last year wasn't fantastic either, to be honest.
So in that channel, which is the hardest hit channel there because there they do the more expensive bikes, has had a very tough ending of the spring, especially May June were not strong at all. There are some pickup in other channels, but generally, the 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. And then lastly, you were talking already in the Q3 last year about the potential impact of the new roof rack range where you thought there might be some excess inventory, which should time to clear out. And we're obviously 9 months later now, and you've been taken a bit by surprise. So what's happened over the last 9 months? Firstly, you've got taken a bit by surprise and how confident do you feel you've got a handle on what's going?
I guess it must be very difficult to work out what's out there. I mean, you have lots of small retailers, but I'm slightly surprised that you're surprised the issues cropping up now. And I'm wondering what your real visibility is like for the second half.
As you look at it, we have 35,000 doors in the end. And what I think is the case here is that these have relatively low value per unit. If it's a specific adaption of the model, for example, for a specific car. So they might not even have always disclosed those things for us in details, and they wouldn't have. But 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. So 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 refracs.
We see from our order patterns for the second half of the year for the major distributor markets, and 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. But despite that, due to the size of the first launch, we are confident that we will be growing the refracs in the second half of the year.
Okay, great. That's very helpful. Thank you very much.
Thank you.
Thank you for that. We now have a follow on question from Frederic Morguard from Potrero Securities. So Frederic, your line is now open.
Good morning, everybody. A couple of questions from my party. We touched upon it just briefly with Peter's question, but returning to the inventory and your visibility with regards to that, I was also a bit surprised that you had of your visibility in dealer inventories. How are you working with dealers to ensure that you have correct or as the correct view, if you can, on what inventories they're having?
Yes. 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 to see through on inventory levels. So if you take any of the major U. S. Customers, we even have their sales through data.
So we have an exact situation on where we stand. But when it comes to all the smaller distributor countries, and we are number 1 in roof racks in the entire world in 140 countries, And it is the category we sell most spread geographically in all those 140 countries. So 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. And 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. So it's not like we completely get strong, but a 1% or 2 percent growth not happening is, of course, significant.
So honestly, if you look at inventory holdings in all major international large customers in all the forward integrated market, very good understanding what the inventory levels are. And as we've openly said numerous times, in small, faraway distributor red countries, we do not have that detail of clarity.
Okay, great. That's helpful. And you also touched upon the order book indicating that you will have sort of a turning situation in the second half of the How far ahead can you see with regards to your orders? And what is the 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 1 or 2 weeks out. But for the international distributor country, so if we are going to shift a full container load or something to a Chilean distributor, a Filipino distributor, We, of course, want to work with them to do that both as cost efficiency 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 room for us, etcetera, in a much longer planning horizon because we want to make sure that happens. So if you look at our order books, the majority of our sales, extremely short because we are next day delivery to retail in all the major countries. But 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 have you will do the rebranding of Tepui to the Tula brand in 2020. And you say that there will be a global rollout.
I was curious to know about what global plans you have for the brand and or for the product. And are you able to gain any new listings outside the U. S. For this product category?
Yes. 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. Then 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. So 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. But 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.
So it will be a more curated assortment than we offer in North America, but that curated assortment will start hitting the market as of February 2020 under the TULER brand.
Okay. Interesting plans. And lastly, on the TULER Evolve, what is your or how is that product developing in the Americas and in Europe, rest of the world compared to your expectations? And are you still seeing positive spillover effects for the TULASUTTERRA you talked about having an Army 1 in that category also before?
Yes. If you look at TULORO, that is developing to our plans, which is very positive to see. And it is helping still to drive sales of the Lusoptera as well. So in 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 Tusa brand on it. So that one is developing very well according to our plans.
Okay. Does that mean that you're seeing actually growth in packs, packs and luggage in Americas?
Yes. If you look at luggage, we're seeing a fantastic growth. But then as you know, in Americas, we both have some OE very basic packs and we have a relatively large legacy. But if you look at luggage, we see a very big growth in Americas as well.
Okay. So positive for the category as a whole?
Yes.
Okay. Thank you very much. That's all for me.
Thank you. We now have another question from Gustaf Sandstrom from SEB. Sir, please go ahead. Your line is now open.
Thank you, operator. Good morning, guys. Sorry for being a little bit late into the call, so apologies if you already answered this. But 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 math?
And is it a fair assumption there should be a material impact on the 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.
And perfect. And looking at mix, how much of a mix impact did you have from sort of new product launches this year? And 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? Or could you please elaborate a bit on that?
Yes. 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. So 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 margins. I think most people will realize that being the undisputed global market leader, we have a pretty high gross margin on Roof Rack.
So there are effects like that also playing in. But generally, if you look at mix effects, 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 cash risk in tax, price and luggage will continue to decline and are declining. They are low margin. Hopefully, with some of the other things not happening, so if we do pick up in roof rack, etcetera, it should help our gross margin in that sense also for mix effect.
Yes. I was mainly referring to perhaps some price increases through the new product categories and the new renovation of the refracs, but I get your answer there. That's all for me. Thank you.
No more questions. I assume operator.
Sorry, there. My line is on mute. We now have a question from Daniel Smith from Danske Bank.
Sorry, I was sort of kicked off of the conference call, so I might have missed this. But the sort of the situation in European RV that you write about and that we also heard about yesterday from the metric, And what is the again, you might have mentioned this, but did you continue to grow in the quarter despite what happened in the market? And what are you seeing going into the sort of the Q3?
Yes. Small growth in the quarter, still growing. Small growth though, mostly driven 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 in the manufacturer part, it wasn't growing in the quarter. But if you look at it, due to the Euro 60 engine chassis issue, they're not getting chassis enough from Fies and others at the moment to be able to manufacture as many as they would want of the new types, which I think personally might be only good for the industry because they're going to cleanse out better the time plan of the old types, which is necessary. But that will definitely impact the whole category in Q3.
I hope still that we will be able to at least be flat or a small ideally some small single digit growth, but it's going to be a tough Q3. Once they start to get those chassis, there will be 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. So very differently from the U. S. Where there was an absurdly high pipeline fill.
Here it was high, but not as absurd. So these two quarters alone will definitely be quite a lot in bringing it to line wide or in Q4 should hopefully be picking up a bit, but definitely from 2020 beyond.
Okay. Thank you. So you're basically saying that after course, Ukraine 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 entered the Q3. Is that fairly well understood?
That is a good interpretation, yes.
Yes. Thank you, Magnus.
Thank you.
Our final question comes from Peter Reilly from Jefferies. Please go ahead. Your line is now open.
Good morning. Just two follow ups, if I may. If I take you back to the Capital Markets Day, at the time, you were saying, if I recall correctly, that saw near term faster growth opportunities in Strouders, medium term luggage was maybe a bigger was a bigger market. It was going to be slower to take off. And if I look at what's happened since then, the impression I get is that you become a bit more cautious about strollers and a bit more and why 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 stronger that we'll be presenting at the fairs this autumn that I'm sure will drive volume. And in general, we are showing strong growth both at the previous launch to the Urban Glide Accelerator and obviously.
So 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. So not an overall change, but sometimes it goes slightly faster, some quarters slightly slower than 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 RIMALVA and lots of up and coming direct to consumer brands like Horizon and Away and others.
It's 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, too embarrassing also in a few years' time. So 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 if over a few years.
I'm convinced of both of them actually. But in terms of a global success, there is a higher likelihood that, that will be stronger, but that is a significantly smaller cap.
And then lastly, an unfair question for ISR, I apologize in advance, but 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. And 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 Q3. So I guess you must be a bit less positive about the growth in the second half of the year and in particular in the Q3 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. And 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. So that opinion hasn't changed actually. We see some of the 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 announcements and what it does with consumer confidence, we don't really know yet. So far, it's mostly retail confidence. And so in that sense, you're right that there is maybe one more worry on it. But otherwise, I'm still positive that Q2 is a strong growth second half of the year is a strong half of the year growth for us.
Okay. Well, I look forward to seeing the new Strela model in September. Thank you for answering all the questions.
Thank you very much. With reports coming out. And I know you will be incredibly busy using Tesla products during your vacation period. So I truly look forward to having a catch up with you after the Q3 report and wish you a great summer. Thank you.