Good morning, and thank you for standing by. Welcome to Birkenstock's Second Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. The company has allocated 60 minutes in total to this conference call. I would like to remind everyone that this conference call is being recorded. I will now turn over the call to Megan Kulick, Director of Investor Relations.

Hello, and thank you, everyone, for joining us today. On our call are Oliver Reichert, Director of Birkenstock Holding PLC, and Chief Executive Officer of the Birkenstock Group; and Erik Massmann, Chief Financial Officer of Birkenstock Group; David Kahan, President of the Americas; Nico Bouyakhf, President, Europe; Klaus Baumann, Chief Sales Officer; and Alexander Hoff, VP of Finance will join us for the Q&A section. Please keep in mind that our fiscal year ends on September 30th, thus our second quarter of fiscal 2024 ended on March 31st 2024. You may find the press release and a supplemental presentation connected to today's discussion on our Investor Relations website birkenstock-holding.com. Additionally, we have included in the press release tables and presentation the quarter release for fiscal year 2023 in order to aid in your year-over-year comparisons. We would like to remind you that some of the information provided during this call is forward-looking and accordingly is subject to the safe harbor provisions of the federal securities laws. These statements are subject to various risks, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release as well as in our filings with the SEC, which can be found on our website at birkenstock-holding.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During the call, all revenue growth rates will be cited on a constant currency basis unless otherwise stated. We will also reference certain non-IFRS financial information. We use non-IFRS measures as we believe they represent operational performance and underlying results of our business more accurately. The presentation of this non-IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS. Reconciliations of IFRS to non-IFRS measures can be found in this morning's press release and in our SEC filings. With that, I'll turn the call over to Oliver.

Thanks, Megan, and welcome to the Birkenstock team. We are very happy to have you with us, bringing the Birkenstock language to capital markets and helping us further develop this super brand. Good morning, everybody, and thank you for joining today's call. We are happy to be here with you to discuss another exceptional quarter. Once again, we achieved the highest revenue level for the second quarter in our company's history, driven by growing demand for our products across all segments, all channels, and categories. Accordingly, revenue grew by 23% versus our second quarter last year. We continue to see strong demand growth in our core markets and in the largely untapped white space areas we identified across segments, channels, categories, and usage occasions. Given the strong results achieved in the first half of fiscal 2024 and the continued demand growth we are seeing, we are pleased to be raising our fiscal 2024 guidance, continuing the 10-year 20% growth trend we highlighted during our IPO. We are increasing our fiscal 2024 revenue growth forecast to 20% on a constant-currency basis, up from our prior guidance of 17% to 18%, and an adjusted EBITDA margin in the range of 30% to 30.5%. Our second-quarter revenue growth was driven equally by an increase in ASP and units. ASP benefited from the continued shift to premium products, a favorable channel mix towards B2C, and the targeted sale price increases. Unit growth was strong across all segments, but especially strong in APMA, one of the key white space markets we have been highlighting. The additional production capacity we have brought online over the past six months in Germany and Portugal to fuel our supply capabilities is allowing us to meet the growing global demand for our products. While the overall global consumer market remains…

Thanks, Oliver, and good morning, everyone. We're very pleased with Birkenstock's performance in the second quarter of fiscal 2024. While the broader consumer environment continues to be challenging, the health and strength of our brand are clearly reflected in our results. Birkenstock has become one of the few must-carry brands in the wholesale channel to drive traffic to the stores and our DTC channels continue to grow as consumers become more intentional in their purchases. Now, let's have a look into the details of second-quarter results. Second-quarter fiscal 2024 revenue was EUR481 million, growing 23% versus prior year. We generated double-digit growth across all segments and channels, demonstrating the desirability and resilience of our brand. Again, our DTC performance was strong, up by 32% versus prior year, driving DTC penetration up 200 basis points compared to last year. At the same time, we increased B2B revenue by 20%. Gross profit margin for the second quarter fiscal 2024 was 56.3%, down 320 basis points compared to prior year. Our ongoing capacity expansion, which will give us the bandwidth and the flexibility that will allow us to expand our footprint in underpenetrated segments and categories was the primary driver of the decline in gross profit margin, representing 220 basis points of the year-over-year decline. Margin was also impacted by the planned one-time government-incentivized inflation-related bonuses and wage increases for our production workforce implemented in the second quarter. Selling and distribution expenditures were EUR113 million, representing 23.5% of revenue in the second quarter of fiscal 2024, up 220 basis points year-over-year due to increased DTC penetration and retail store investments. G&A expenses were EUR20 million, down from EUR23 million in the prior year despite incremental public company costs as the year-ago quarter was impacted by one-time corporate event expenses and accruals that did…

Thanks, Erik. And let me summarize our discussion. The exceptional results during the first half of fiscal 2024 demonstrate the resilience of our business and our ability to achieve strong double-digit revenue growth. We are executing on our proven engineered distribution strategy to drive both volume and ASP growth and meet the growing consumer demand for our products, both classics and new, emerging products, and across all segments and channels. We continue to significantly outpace our peers in Americas and Europe with strong growth momentum in our DTC footprint and increasing demand from our loyal and steady B2B partners. At the same time, we are entering the next chapter of our growth trajectory as we tap into our largest white space market, the APMA region. Increasing brand awareness and taking market share while following our playbook of disciplined engineered distribution to support ASP. Given the strong first half and the continued strong growth in demand we are seeing, we are raising our guidance for fiscal 2024. We now forecast total revenue of EUR1.77 billion to EUR1.78 billion equals 20% constant-currency growth. In line with the compound annual growth we have achieved over the past decade, demonstrating the sustainability of our strong growth trends. We expect adjusted EBITDA margin of 30% to 30.5% and adjusted EBITDA of EUR535 million to EUR545 million. We remain fully committed to our medium and long-term targets of mid to high-teens revenue growth, gross profit margin around 60%, and adjusted EBITDA margin over 30%. So in short, we are very pleased to report that we have never been in a better position to grow our business. Birkenstock is 250 years strong and we have a long runway for growth ahead. I would now kindly ask the operator to open our Q&A session. Thank you.

[Operator Instructions] And the first question today is coming from Matthew Boss from JPMorgan. Matthew, your line is live.

Thanks and congrats on a great quarter. So, Oliver, could you elaborate on the brand's continued global momentum? And have you seen any change in business so far in the third quarter relative to the high-teens embedded second-half outlook? And then just from a cost perspective, what is supporting the raise to your full-year EBITDA margin outlook relative to three months ago?

Okay. Thank you for your question, Matt. We're seeing nothing in the current trading that would cause us to be more cautious on revenue growth in the second half of the year. And as you know, we don't guide quarter-to-quarter only for the full-year and long-term and we are very comfortable with our forecasted revenue growth of around 20% for '24 on a constant currency. By the way, which is consistent with our 10-year track record, as you know from our IPO roadshows. Quarters can fluctuate, shipments can shift, but there can be some noise from quarter to quarter. Also, the second half is more DTC heavy. We have less visibility in the channel and than we do in the B2B channel, where we have excellent order book visibility. We continue to hear about, as you put it so perfectly, Matt, a selective recession. So we are approaching our outlook for especially DTC with that in mind. Also as you can see from our results, we are not seeing any current impact from that. And now like the margin question of -- part of the question is, we are very pleased with our current outlook on margin, particularly given the investments we've made to support the growth in Pasewalk and Arouca. The main driver of the improved margin outlook is stronger revenue growth, driving better fixed-cost leverage and utilization. So halfway through the year, we are very comfortable we can hit that 30% to 30.5% range.

That's great color. Best of luck.

Thank you.

Thank you. The next question is coming from Randy Konik from Jefferies. Randy, your line is live.

Yeah, thanks, and good morning, everybody. I guess, Erik, maybe for you. I want to just unpack gross margin a little bit and maybe kind of give us some perspective on additional drivers in the quarter. And then looking ahead, how we should be thinking about the various fluctuation -- fluctuations around gross margins in coming quarters? Give us some perspective there. Thanks, guys.

Hi, Randy. Thanks. Yeah, it's Erik. So overall, I have to say that the gross margin will always vary from quarter to quarter due to the shift in channels and mix of business. So high B2B revenue as we saw in Q2 now leads to lower ASP and therefore lower gross margin and obviously other way around with higher DTC share. On the other side, higher B2B share does lead to lower selling distribution costs. So that's always a balance and that's why we don't give guidance on quarterly margins. It can always shift a bit on timing of orders and shipments. So we only look or I mainly look at margins on the annual basis and I feel very comfortable with our mid to long-term guidance of around 6% gross margin and EBITDA margin of 30% plus. So in terms of the year-over-year decline that was discussed, '24 certainly is a transition year as we did significant investments into our production to support the demand we see and long-term growth. So this will temporarily dilute -- be diluted and will continue until we reach greater utilization, but be aware and reminded, we are exercising discipline in our distribution and control closely our growth to avoid the dilution in brand equity. So both reasons obviously lead to the margin we see this year. And long term, as said, the guidance of around 60% gross margin, EBITDA of 30 plus we feel very comfortable. I hope that answers your question.

Thank you. And the next question is coming from Dana Telsey from Telsey Group. Dana, your line is live.

Hi, good morning, everyone, and nice to see the progress. Two things. On the retail store performance, anything different that you're seeing by region? Is there -- and the new locations that you're going to, whether the store size and how you're thinking of the contribution to DTC of retail sales? And lastly, the category expansions that you're doing, any updates given the closed-toe performance of getting into some of those other occupational uses that your footwear can be used for? Thank you.

Hey, Dana, this is Nico. Thanks a lot for asking the question. I'm going to cover the retail part of your question and then Oliver is going to take over with the closed-toe part of the question. So first of all, we are very pleased to be able to share with you that we are well on track with our global retail expansion. In Q2, we opened six new stores. From last year's Q2, we opened 13 new stores. Amongst others, Miami, as you know, in the Design District, Tokyo, two stores and Mumbai also a new store. Every store that we open is performing currently above plan. That's very, very pleasant to see and that's also a testament of the great magnetism that we have as a brand when we open a store. Every store, basically our average payback on CapEx is 12 months to 18 months. So that shows you, it's not a big investment case that we're having here. It's really something that adds to our top line and that adds also to our profitability. What we do see in our stores as well is that we have an over-indexed growth of premium-priced product, and an over-indexed growth of closed-toe. So wherever we open a physical connection to our consumers, those categories will benefit. For the remainder of this fiscal year, we plan to open a similar amount of new stores in cities such as Paris, in cities such as Shanghai. So again, we are very confident with the outlook on our store expansion plan.

So, I'm taking the closed-toe part of your question, Dana. It's -- the last quarter was predominantly a sell-through quarter and it was winter. So we saw more demand for the closed-toe silhouettes. It was over 50% of the sales were coming from closed-toe silhouettes. So the growth in this segment was compared to last year, first two quarters, 77%. So there you can really see this is a rocket, okay? So the closed-toe shoe segment, which we -- a few months ago when we prior IPO, we talked about it as a white space opportunity. And now you see compared to the last year, the first half of the year, we grew by 77%. So that's really massive. The second quarter is a big B2B selling quarter for our spring-summer season. So naturally, we will see more opend-toe silhouettes in that mix in the second quarter. And the key here is that we are now a full-year non-seasonal brand with strength in closed-toe, including clogs and sneakers and sandals. ASP increases through closed-toe, as you know, and it opens up new usage occasions. Our non-sandal sell-through was over 40% in the quarter, which is super strong, okay?

Great. Thank you very much.

Thank you, Dana.

Thank you. The next question is coming from Sam Poser from Williams Trading. Sam, your line is live.

Thank you. Thank you for taking my questions. Good morning. I have two. Number one, can you talk a little bit about this -- like how -- have the -- has the sandal business inflected more since the end of the quarter? And then secondly, not related, following up on the gross margin question, how long will it take for the new production facilities could be optimized so you don't -- so they are no longer a drag on the margins away that 200 -- like when will that 220 basis points go away and be offset by the productivity of those factories and the sales that relate to them?

Hi, Sam. Thanks for the question. This is Alexander and I will take the gross margin piece. Actually, what we communicated through the IPO and referring to Erik's statement, clearly '24 is a transitionary year. We took the strategic decision to go with further capacity to meet future demand. We also indicated that we see in '25 a better absorption, but '24 is one year where we will bring over volumes from Gorlitz to Pasewalk, mainly. Pasewalk is the only factory out of our expansion program with Gorlitz and Portugal, which is a complete new factory where we would bring in initial under-absorption overhead and so on. So that will be the heaviest impact in '24 and we expect '25 onwards to see a better absorption and a better impact on the margin side.

This is David, Sam. Thanks for the question. Just a little color on the breakdown with the sandal business. The momentum in sandals has been incredibly strong both DTC and at wholesale. As a matter of fact, what we're seeing in our core sandal business is not only strong sell-throughs but a transition in penetration, leather versus synthetic. Leather sandals are trending about 68% above last year, while synthetic is 22%. So we're not only seeing the consumers still choose our icons across all the different styles, we're seeing them trade up to more premium versions.

Thank you very much.

Thank you. The next question is coming from Simeon Siegel from BMO. Simeon, your line is live.

Great. Thanks. Hey, everyone. Really nice job guys. Hope you're all doing well. Oliver, or David or Nico, maybe all of you, just the increased strength you're seeing with those key retailers that you talked about in the prepared remarks, the earlier visibility, it's really all great to see. Can you speak to any changes you're seeing in maybe your discussions with them about the assortment that they're asking for versus your ability to suggest what they should take? I guess I'm just wondering as you continue to innovate your products, do you think you're getting more stronger trust and ability to suggest to them as opposed to them specifically asking for maybe more limited SKUs that have been your hero products historically? Thank you.

Simeon, great question. This is David. As we've said before, 95% of our growth is coming from existing retail partners. So clearly, the demand is there to expand not only deeper inventory, but also the spread of products. As we've said, we allocate everything, every style, every quantity by door, even in people that have chains with hundreds of doors. Everything is allocated to the door level. So the assortments are really vendor-managed. What we're seeing is the momentum in closed-toe and non-sandal products is incredibly strong. So not only are they doubling down on the sandal business, but they're also supporting all of the non-sandal categories. As referenced, we know that the overall wholesale market might be described as being a little choppy. Our sell-through and this is sell-through, not sell-in was up over 30% in the quarter. So obviously, there's a lot of demand to expand our products. And if you've been out at retail, as I know many of you have, you're seeing some of the incredibly strong statements at retail like our 250-year anniversary brought to life in many of the major retail partners.

That's great. And then just David, to your point about the synthetics, are you seeing -- I don't know if you guys have done -- have updated the 3.6 survey, but are you seeing greater frequency of shop like are you seeing anything different with the synthetic option versus how people shopped your product before?

I would say not at all, except a lot of our consumers seem to be trading up to leather almost as an investment type item. I would say in a lot of our consumers' closets, a pair of Birkenstocks might be the most expensive footwear item they have compared to some of the -- some of the sneakers and choosing a leather Birkenstock, it's not an either-or with synthetic because synthetic is also up. I just think that the response to the leather products as people invest has been -- the penetration of leather is growing, synthetic is growing also. So it's not either or it's just reaching more consumers, I believe.

Thank you. And the next question is coming from Mark Altschwager from Baird. Mark, your line is live.

Thank you. Congrats on the progress and results here. First, just with Q3 being a bigger DTC quarter, I'm wondering if you can share any color on the momentum you're seeing this spring relative to Q2? And then separately, you mentioned with the spring price increases, you didn't see any impact on demand. Could you speak to how you're thinking about like-for-like price increases in future seasons to offset some of the inflationary cost pressures? Thank you.

Hey, Mark, this is Nico speaking. Thank you for the question. So the first part of your question was to get a bit more color on the DTC performance in the current trading of Q3. So we see a continued strong demand in traffic in our own stores. The new stores are performing really well, as I said. So there is definitely excitement around our physical touchpoint for the brand. Online as well. So we see an increased traffic across the board through all the regions. Yet we do have the big months still to come. So June, July, and also August are big DTC months and we're just very -- we are confident, but we are also looking at those months to come in the next couple of weeks. The second question was on pricing. So to give a bit more color on the European pricing adjustments we had in spring-summer '24, two categories in mind for price executions. One was textile, a big part of the business. We elevated the prices by 20% RRP and then we also touched Boston again with 15% RRP increase. Both of them were not -- were well accepted by the consumer. So there was no sort of negative, no signs of rejection, negative effect on our sell-through. We look at pricing as a strategic measure in the future. So every season, we go through the entire line and look at every model to see what's the input cost and how do we have to adjust pricing given inflation, but also what's our brand equity where we can ask for an increased price. That's how we approach pricing in the future.

Mark, this is Alexander. Just to add on the inflation piece and how it's impacting margin. Standalone Q2, you saw a 100 basis-points net inflation impact going forward. If I look into the third and fourth quarter, but also '25, what we currently see is labor mid-single-digit, going down then in '25 raw materials, low-single-digit percentage. So it's definitely the clear goal that we will offset any kind of inflation on COGS and selling and distribution expenses.

Excellent color. Thank you.

Thank you. The next question is coming from Sharon Zackfia from William Blair. Sharon, your line is live.

Hi, thanks for taking the question. I'm curious, just given the strength that you continue to see in the US and as you've been opening more stores, are you seeing any kind of changes in the demographic of the customers in the US, whether you look at kind of income levels, gender, region, or ages? And I'd also be a similar -- we'd be interested in a similar answer for Europe, just given the transformation efforts that you've had in that region? Thanks.

Yeah, thanks for the question, Sharon. This is David. I think you have to just kind of wrap your arms around the fact that this brand has the broadest demographic of any brand on the face of the Europe. When we talk about our addressable market, it really is quite frankly, everybody. We're just reaching new consumers everywhere we look. We're reaching athletes right now when they recover from sports, finding the benefits of the footbed. We're seeing a significant growth right now in the youth market who's basically maybe a little bit tired with athletic footwear over the last couple of seasons and has added Birkenstock to their closet. And just remember, in a lot of those chains that have been predominantly athletic footwear driven, a pair of Birkenstock is an incremental purchase in those stores. So those stores are very keen to add something like Birkenstock to their assortments. So I would say we're growing across all demographics. Most quickly, probably the youth and more sport-oriented consumer, but it's been very, very broad and the growth has been just as strong in some of our old-time heritage brown shoe comfort stores that go back to the early 1970s.

Thank you, David. And also, Sharon, thank you for your question. I would definitely echo David's point. The beauty of us is you don't lose older customers while you win new customers and younger customers and that's what we see also in Europe. We do see a broader base growth among younger audiences that find us for many reasons, 1774, the Boston, and some great PR executions in Europe. But what happens is they stay with us and they stay with us until the very end. So you don't lose that older customer while you win the younger customer audience.

And you can see some of it also in our membership program growth and our membership program growth by 40%. So, that's another sign or signal to see, okay, how vivid this brand is and how -- the more we collect, the broader the fan base will be. No matter age groups, races, social demographic, it's all in one basket. 70% to 80% of our collection is unisex. So we are the perfect brand to welcome them all and give them access to the footbed. And once they are in the footbed, they come back.

Thank you. The next question is coming from Erwan Rambourg from HSBC. Erwan, your line is live.

Hi, there. Hope you can hear me okay? I just wanted to congratulate you on the quarter and the upgrade for the guidance. Two follow-ups. One on the Asian potential, maybe for Klaus or Oliver. It seems that the consumer is under pressure in China for most consumer companies, but it's probably not the case for you. I'm wondering if this is a good time to find prime locations at preferential costs and to build awareness. Do you have a capacity issue in terms of shipping to Asia and particularly China? And maybe can you remind us of what the setup is there in terms of working with a partner or going direct? And then maybe secondly, if you could talk about ASPs, I think David was quite clear on consumers upgrading to leather. You've put through quite a few price increases. If I look at the 23% growth in the quarter, I remember you gave a reference point at the time of the IPO saying that the average payer was reselling at about $90 at the time. Where would we be on that metric today? And if you can maybe split the 23% growth between volume mix increases and price increases, that would be super useful. Thank you.

So I'm taking this first part of your four parts of your one question. And thank you for the questions. Wisely chosen. So overall, the APMA region is from a geographic point of view, one of our biggest white space opportunities, of course. And as you see in the numbers, we have grown there by 42%. So that's quite a massive growth. And compared to a lot of other brands cooling down in this environment, we are very encouraged. And please keep in mind that this 42% growth is coming with a full disciplined and highly-engineered distribution model where we don't flood the market and we don't overpush. It's always in a pull mode. We allocate the products and Klaus, who is responsible for the region will give you more in detail about our distribution strategy there and how we execute the engineered distribution in this segment. Klaus?

Erwan, Klaus here. Hello. Thank you for your question. First of all, I want to point out that obviously, we are aware of the problems in China and what's going on. I mean, we're there in the market since a long time. The whole story we're doing is an APMA story. So we are not only depending on China. And what we learned in expanding, I mean, the strategy is following our learnings from the EU and the US. So it's a qualitative distribution and it's a mixed model. So obviously, we are going with a DTC focus, but we also are signing in a partner to balance out also the size of the territories. So this is -- and talking about allocation, I mean, we have prepared that field way before as we also talked in the roadshow a lot. But now the allocation situation has so much improved that the underdeveloped markets are like positively affected from that and there's no problem on that right now.

Great. Thank you.

And then I would just grab the ASP part of your question, which was the fourth part of your question. And as you know, we don't give any quarterly guidance. And -- but as I said in the -- in Matt's response, we aren't seeing any significant changes in the trend. We are really pleased by current trends, but we still have a five and five important months ahead of us. They are heavy in DTC where we have less visibility and that's -- we're about halfway through fiscal Q3. And despite the volatile market environment, we are having -- we're hearing so much about. So it's a lot of rumors around, of course. We are not seeing anything that would give us a pause. And I would say, David, from your perspective, you may add something here because ASP is really growing.

I mean, one interesting point on ASP, and it's a good way to look at it is speaking for the US, according to the economic reports from the FDRA, retail prices on footwear are basically up 0.3%. Our ASP is up six-full-percent. So it's a multiple of what's going on in the market. Part of it is mix and part of it is price. But obviously, when you're selling through product at virtually full-price, 90% plus full-price realization, that's where you get the benefit of the ASP because the consumers realize the equity of your brand and they're willing to pay the price. And I think we're proving that right now in this environment.

Super useful. Thank you.

Thank you. The next question is coming from Adrien Duverger from Goldman Sachs. Adrien, your line is live.

Hey, good morning. Thank you very much for taking my question. I was wondering if you could comment a little bit on the performance of the new product categories and the new products. I'm thinking maybe of some of the sneakers you released and some of the boots and also what would be the impact on ASP from these new releases? Thank you very much.

So as you can imagine, Adrien, it's a very big push in ASP and in this closed social segment, we talked about the massive growth rates there. And as you know, like ASP right now is like 50% coming from a product mix and 50% is coming from a channel mix. So the product is a key driver for the ASP at the moment, especially in the first-half of the year. Again, just keep this in mind and the winter season like the first two quarters are more affected by this [indiscernible] sequence in the ASP, but yeah, we're very proud about this growth here because it was pretty strong.

Thank you very much.

Thank you. And the next question is coming from Paul Lejuez from Citibank. Paul, your line is live.

Hey, thank you. Can you just go back to the Pasewalk facility. How ramped-up is that facility today? What capacity is it producing at? I'm curious if you could talk about the performance and efficiency relative to your plan and where you expect to be by the end-of-the year. Also, I think at one point, you said that facility could increase your volumes by 50%. Let me know if I'm remembering that correctly and any update there? And then just last, can you frame the size of some of your larger countries in the APMA region? Thanks, guys.

I'm taking the first part like the Pasewalk, the new factory, which is like Arouca, Portugal, and Pasewalk. We're super happy with the setup in Pasewalk at the moment. As you know, we will definitely grow the pairs in a very, let's say -- I would say in English in a very disciplined way moving forward. We told you that overall we will develop like 10% unit growth every year and that's what we are executing. So we are happy with the starters in Pasewalk. We hired most of the people there already, which is the most important thing for us to get access to the workforce, which is super strong at the moment. We're constantly improving and developing and further developing the footprint also in our pre-production segment in Portugal, which is Arouca, which was -- which will help us to be much more flexible than in the past. And it's the same thing for Pasewalk, focusing on the EVA portion of the business, focusing on the PU portion of the business coming from Pasewalk, but also making sure that we have the maximum flexibility within this new factory to make sure we can develop and further support our global growth. And that's something where we really put a big, big effort in. And as you know from our outperformance and rising the guidance, you may expect like shorten the timeline of the return on invest curve, which will definitely be the case. During the roadshow, we talked about return of invest in '26 or a normalized margin level, let's say, and this will be shortened now because the performance is much better than expected.

Thank you.

Thank you. The next question is coming from Michael Binetti from Evercore. Michael, your line is live.

Hi, this is Jesalyn Wong on behalf of Michael Binetti. Thanks for taking our questions here. So, Oliver, on the top-five core silhouettes still up over 20% in the quarter, can we talk about how trends were from here and how to sustain that kind of growth? And maybe for Erik or David, in Americas, total DTC is now 29% of penetration. So this quarter the wholesale B2B selling revenues grew roughly about 16% year-on-year, but sell-through to strategic accounts was really high at 33% there. Is that driven by Birk exiting non-strategic accounts? And will we see the sell-in catchup to the sell-through in the third quarter and the fourth quarter? And just curious what was sell-in to strategic accounts relative to the 33% sell-up that the company cited? Thank you.

Yeah. So, I'm taking the first part of your question. Thank you for your question. As you know, we are universal purpose-driven brand, never goes out of fashion. We are beyond fashion. I think the biggest proof point here is that revenue from our five classic silhouettes, which make up roughly 75% of the business, grew by over 20%, as you said. And the quarter-end ASP was up over 10%. So if you see, these are the core portion of the business and this grows 20% and even in the ASP, we grow by 10%. This is -- I would say this is a massive message to the market that we are growing everywhere, okay? And really above the average. I think that says a lot about the fashion risk within the company. And what we learned is that our icon still have a lot of growth potential as we continue to innovate and add to these heroes models with new features like premium leather, big buckles, the shilling, and you know some of the other models as well. They need to maintain their relevance on the long term, okay? So this is really what we're doing within our product teams. We create a trend within the brand constantly. And while we see the continued growth in our long-time core icons, new product introductions have been incredibly strong. Don't forget this, whenever we bring something to the daylight, it's super strong in sell-through, it's super strong in sell-out as sneakers were up 31% over last year and new starts like the Catalina and Lutry are ranked now in our Top 20 starts this quarter. So this is something that's really encouraging and it shows that we have the right connection to the market and it's not fashion-driven. It's coming from a 250-year-old purpose-driven brand and that is the magic shows we are executing in the market.

Jesalyn, I'm going to take the second part of your question. This is Nico. I think we have to differentiate between sell-in and sell-through. So what you see now as a sell-through in our B2B partners is a sell-in of previous quarters. So that gives you the perspective on those two numbers. We -- as you know, we have done a big transformation in B2B in Europe. So we exited many partners. Globally, distribution is a living document. So you'll definitely see here and there some terminations going on. It's a normal effect, but we don't sort of consider a big termination wave ahead of us with B2B. However, we manage our B2B partners very tightly. So you understand that we allocate the product, you understand that we achieve full-price realization that is superior to any other brand out there. And we also understand that we leverage our partners with them having a specific role in the marketplace, be it reach, be it validation, be it authentication of our product, that's what they have to do for us and that goes beyond being transactional and that's how we look at B2B.

Thank you. And the final question today is coming from Jim Duffy from Stifel. Jim, your line is live.

Well, thank you. Thanks for squeezing me in. My question builds on some of the comments in your last response. We're very pleased to see the strong uptake of closed-toe and non-sandals. I'm curious, can you speak to the gender mix contribution in the closed-toe adoption and maybe highlight some of the specific styles beyond the Boston that are contributing to that strength?

Yeah. Hey, Jim, this is David. Yeah, the Boston certainly has led the way, but what we find is just like when Arizona opened up the sandal category to other styles like the Gizeh and the Mayari, the Boston is doing the same thing in clogs. We introduced a style called the Lutry, that's outselling any expectation we could have possibly had for that category. Our other styles like the Tokyo, the Naples, it's like Nico said, anytime we introduce a new style and we bring it, we give it a little oxygen, it really starts to exceed all expectations. Sell-through on our sneakers, speaking for the US sell-through was 31% higher. And what's most interesting is when we talk about like white space categories, you can almost look at men as one big white space that we don't really identify yet, but our men's business is up 45% at retail sell-through versus a year-ago in a market that again is basically flat. So any category, any gender, any segment that we give a little bit more oxygen to with discipline, we start to see the results and the benefits.

Appreciate it.

Thank you. And this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.