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Ladies and gentlemen, welcome to the DOUGLAS Group Q3 2025-2026 Earnings Results Conference Call.

I'm Mathilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Sander van der Laan, CEO. Please go ahead.

Yes. Thank you very much, and good morning, everybody, on the 12th of August, another hot day ahead of us. So, we are here today to give you an update on our third quarter results, which I will do as normal together with Marco, our Group CFO.

So, this morning, we also released, let's say, our press release. And as most of you have read, we have to report a relatively weak quarter, which was impacted by the weak dynamics in especially our largest markets, Germany, France and the Netherlands, which collectively account for 60% of our sales.

And in those markets, Germany, the market has declined, the French market was flat and also the Dutch market, premium beauty market has declined. So that has led to, let's say, results which are below expectation, where we also see that customers are very receptive to price. Certainly, online, there is a significant price competition because pricing is much more transparent and customers are generally lack kind of the confidence where the consumer confidence is at a very low point in many markets in the lowest point ever.

Although more recently, it looks like that this is kind of bottoming out. This has led to a sales decline in both channels with a negative sales in the stores of 2.5% and a negative sales in the e-com channel of minus 1%. If you would separate Parfumdreams/Niche Beauty, which are our pure-play brands from the e-com channel, then for the DOUGLAS NOCIBÉ e-com business, we have for a slight positive number. And we look to the omnichannel number for the full company, we have to report a minus 2%, which led to EUR 988 million of sales.

EBITDA. Adjusted EBITDA of EUR 127.5 million, which is a margin of 12.9% and net income of minus 2.6% and net leverage of 3.1. Our debt position is actually developing positively. But since it is debt divided by EBITDA and the EBITDA has declined and our leverage has moved to 0.1. The pre-IFRS leverage is actually at a very, I would say, healthy level of 2.2. So that is basically the summary of our results.

Looking on the next page, I was already alluding to that. If you look to the selected beauty market in Continental Europe, I'm saying Continental Europe because we do not operate in neither the Nordics nor in the U.K. We do see that in the Continental Europe, the market is growing. We only have market data for roughly -- not roughly, for 8 to 9 countries out of the 22 countries where we operate.

But if we look at the data and we look at the development, then we do see that the premium market is growing. However, it is growing in those markets where we are at a relatively smaller position because in Germany, the Netherlands and in France, which account for 60% of the business, those 3 markets together had a decline in the third quarter.

And in Southern Europe, Italy, Spain, Portugal and in Central Europe, the market has been growing. In Central Europe, we have a strong position. But in Southern Europe, we have a strong position in Italy, but we have a very, let's say, small position in Spain, which is a big market, and we do not benefit from the developments over there.

Consumers are increasingly focused on price and value. That is, by the way, not specific for selected beauty. You could basically say that for retail in general, there is a significant more focus on pricing and value as a result of, let's say, the uncertainty in the world, both economically but also from a social and -- let's say, perspective.

What we also see that within this market, which is growing, that the store channel in general is under pressure. So, in most countries, we have seen declining traffic in the store channel in general. I do not mean specifically DOUGLAS. And as a result of that, we do see that the store channel sales in many countries has declined versus the prior year.

On the flip side, we do see that the e-com channel in many markets is more dynamic. But as I just said, there is more pricing competition in there. So, the ability to realize, I would say, a healthy gross profit is more challenging. So that is basically a perspective on the market development.

Translating it to, okay, what does it mean for DOUGLAS on the next page. We have adjusted our guidance for the current financial year on the 18th of June. And today, reflecting on the market and our current performance and our expectation for the kind of the current quarter, the fourth quarter, we are basically reconfirming our guidance, and we expect that our sales will end up between -- well, you can see the range between EUR 465 million -- sorry, between EUR 458 million and EUR 463 million, which means that we expect a full year sales growth between 0% and 1%, and adjusted EBITDA margin of around 15% and a net leverage between 3x and 3.5x is our expectations for the full year, and we have no reason to adjust that since June 18.

With that, I'm handing over to Marco, who will give an update on the financials, and then I will later come back to give a few updates on strategic developments and core initiatives. Marco?

Thank you. Thank you, Sander. Let me now talk about our financials for the third quarter of the financial year.

In Q3, group sales declined by 2% year-on-year to EUR 988 million, and on a like-for-like basis, sales were down 4.5%, reflecting continued consumer caution, heightened price sensitivity across our markets as well as adverse weather conditions, including heatwaves in several regions, which negatively impacted store footfall.

Moreover, the year-on-year comparison was slightly affected by Easter timing as Easter-related trading was partially sitting in March this year versus fully in April last year. From a regional perspective, the decline was primarily driven by DACHNL, SE, France and PD Beauty, while CEE remained resilient and continued to grow.

On profitability, adjusted EBITDA decreased by 19.4% to EUR 128 million, corresponding to a margin of 12.9% compared to 15.7% in the prior year. The main driver was pressure on gross margin as promotional intensity remained elevated. Despite we maintained a strict cost control, the benefits from these measures were more than offset by higher personnel expenses related to the store expansion over the last 12 months and wage inflation.

Looking at the channel performance, store sales declined by 2.5% to EUR 661 million, corresponding to a like-for-like decrease of 6.5%. Lower traffic and softer conversion rates continued to weigh on performance. E-commerce sales proved more resilient, declining by just 1% to EUR 327 million. When we focus on DOUGLAS NOCIBÉ only, i.e., excluding Parfumdreams and Niche Beauty, e-com sales actually grew 0.6%, confirming the stronger performance in the premium positioning.

Growth in cross-channel services, which increased by 18% versus prior year, partially offset lower online order volumes. And at the same time, the DOUGLAS App continued to gain relevance, accounting for 43% of e-commerce sales, up from 40% in the prior year. In addition, our Retail Media business continued its strong momentum, growing by 24% year-on-year, reflecting the increasing attractiveness of the DOUGLAS platform for brand partners and the strength of our customer reach and engagement.

Cross-channel services now account for approximately 6% of group sales, up around 1 percentage point versus last year. This trend is particularly important as it shows that more customers are engaging with the DOUGLAS ecosystem across multiple touch points. These customers tend to be more loyal, spend more overtime and generate higher lifetime value, underlining the strategic importance of our omnichannel proposition.

Overall, while consumer demand remains subdued across channels, the continued adoption of cross-channel services and the growing importance of the app demonstrate the strength of our integrated omnichannel model and support customer engagement across the system. For example, in Germany, we have a ROPO effect of 25%, meaning that 25% of our stores customers research online before they buy offline.

Across markets, trading remained impacted by lower traffic and weaker conversion rates, resulting in negative sales growth in most regions. Profitability development across most markets reflected ongoing gross margin pressure, driven primarily by mix effects and promotional trading environment, negative store like-for-like creating an adverse operating leverage effect and the ramp-up in performance of newly opened stores.

CEE continued to stand out, delivering 4.4% sales growth while maintaining a strong adjusted EBITDA margin of 21.6%, demonstrating the attractiveness of the region and supporting overall group profitability as well as the possibility to sustain margins with a positive top line growth.

DACHNL, France and SE saw more moderate sales declines, while PD Niche Beauty remained affected by a challenging competitive online environment and the repositioning of the business following the 11 Akzente store closures.

Looking at gross profit. Gross profit decreased from EUR 457 million to EUR 436 million, resulting in a gross margin decline of around 110 basis points to 44.2%, primarily driven by price promotional effects and mix from a category and brand perspective. Lower volumes added further pressure on gross profit, while supply contributions remained slightly below prior year level.

Moving on to operating expenses. Overall, net operating expenses increased by 3% year-on-year from EUR 299 million to EUR 309 million. This was primarily driven by higher staff costs, while other net operating expenses increased only by 1.8%, mainly driven by continued IT investments.

Starting with the staff costs, the increase was mainly driven by the expansion of our store network over the last 12 months. In addition, wage inflation across European markets led to higher personnel expenses. As a result, coupled with negative like-for-like in the stores, the staff cost to revenue ratio increased year-on-year.

We're actively addressing this through several measures, including adjusting working hours in the stores with lower footfall, implementing temporary personnel cost reductions and continuously optimizing our store network. These initiatives are aimed at improving productivity while maintaining a high-quality customer experience.

Looking at other network operating expenses, marketing efficiency continued to improve, resulting in a lower marketing cost to revenue ratio. Property costs, excluding rent, remained stable, reflecting our disciplined cost management approach.

IT costs as a percentage of sales slightly increased, reflecting continued investments in our technology platform and infrastructure. For example, during the quarter, we went live with our latest digital commerce platform in Romania, marking another step of progress in harmonizing and upgrading our architecture across Europe.

Finally, delivery costs remained broadly stable year-on-year. When looking at the store perimeter, like-for-like stores perimeter costs were slightly below last year, confirming the continued attention to cost development, but the negative sales like-for-like and the gross margin investments led to a bottom-line dilution in margins.

Overall, the increase in net operating expenses was driven by higher staff costs related to network expansion and wage inflation as well as continued IT investments, while other operating cost categories remain well managed.

As already pointed out, lower sales and gross margin pressure weighed on profitability. Despite continued cost discipline, adjusted EBITDA declined by 19% to EUR 127.5 million with a margin of 12.9%. Below EBITDA, depreciation and amortization increased to EUR 98.1 million from EUR 92.7 million in the previous year on an adjusted basis, reflecting investments made in the previous periods in our store network refurbishment as well as technology infrastructure.

You may notice that reported EBITDA is slightly higher than adjusted EBITDA, and this is due to the adjusted gains from the sale of certain real estate assets in the Netherlands, bringing a capital gain of approximately EUR 6 million and cash proceeds net of roughly EUR 9 million.

Adjusted EBIT declined to EUR 29.4 million compared to EUR 65.5 million in the prior year quarter. The financial results developed positively, improving by 13.3% year-on-year from negative EUR 32.9 million to negative EUR 28.9 million, supported by slightly lower interest expenses and favorable FX development.

On taxes, we expect the full year effective tax rate on an adjusted basis to be at around 32%. This is slightly higher than the expectation at the beginning of the year, mainly as a result of the lower earnings leading to a greater impact of non-deductible items on the taxable income. On a reported basis, the effective tax rate will look higher due to the non-deductibility of the goodwill impairments we took last quarter.

Overall, the quarter reflects a challenging trading environment, lower gross margins and the result impact on operating leverage weigh on profitability, leading to adjusted net income of negative EUR 3.8 million compared to positive EUR 24.1 million in the prior year period.

We made further progress on capital efficiency during the quarter. Average net working capital declined by 27% year-on-year to EUR 166 million, equivalent to 3.6% of sales compared to 5% in the previous year, driven by continued inventory and supply chain initiatives.

Average LTM net working capital calculation benefits from a full year effect of the supply chain financing utilization that is, however, stable on a year-on-year basis at roughly EUR 135 million. The underlying inventory performance shows a slight increase in DIO from 122 to 125 days, mainly as a result of the lower sales in the quarter despite the larger store network footprint, leading to increased stocks compared to last year.

At the same time, CapEx decreased by almost 30% to EUR 31 million, reflecting a more targeted investment approach while continuing to support strategic priorities including selective store modernization, digital capabilities and supply chain infrastructure.

We expect CapEx to be around EUR 130 million this year, slightly lower than our initial assumption, reflecting the updated market conditions, in particular of the store channel. This includes a more targeted approach to our store network, combining selective openings and refurbishments with dedicated store closures when returns are no longer meeting our requirements. In fact, in the first 9 months, we closed 31 owned stores compared to 12 in the year before.

As a result, capital is being reallocated towards higher returning opportunities across our omnichannel system. And these investments support cross-channel integration, scalability, productivity and customer experience while requiring significantly lower capital intensity than a traditional physical expansion. However, such investments are often shifting to operating expenses in the SG&A part of the P&L, especially when referring to software, as commented earlier, which is important to our cash flow generation.

Adjusted free cash flow amounted to EUR 406 million, corresponding to a cash conversion of around 70%. After cash EBITDA adjustments of EUR 6 million, reported free cash flow reached EUR 399 million and after lease payments of EUR 251 million, free cash flow amounted to EUR 148 million.

The year-on-year decline in free cash flow is primarily driven by the lower earnings contribution, reflecting the softer trading environment and lower profitability compared to the prior year. This impact was partially offset by reduced CapEx as we continue to prioritize investment discipline and allocate capital toward the highest return opportunities across our omnichannel ecosystem.

Property rents show an increase year-on-year, mainly linked to the store and warehouse openings of the last year, and this development will naturally stabilize with the normalization of the network evolution in the future.

Net financial debt decreased from EUR 924 million to EUR 863 million on a year-on-year basis, more than offset, however, by higher lease liabilities resulting from new store openings and lease extensions. As a result, reported net leverage increased to 3.1x from 2.7x, driven by the higher lease liabilities and as Sander mentioned earlier, the lower EBITDA into the network, while pre-IFRS 16 leverage stood at 2.2x. The leverage remains a key capital allocation priority for us.

Now concluding, let me remind a brief summary of our year-to-date performance. Our 9-month results were challenging, but provide a solid foundation towards achieving our 2026 updated guidance, with sales and profitability developing in line with our expectations.

Omnichannel execution continues to be a key growth driver, supporting customer engagement and reinforcing our market position across channels. At the same time, our continued focus stays on operational excellence, disciplined cost management and working capital supports earning quality, strong cash generation and deleveraging.

Based on our performance in the first 9 months and our expectations of the fourth, we confirm our fiscal '25-'26 guidance, as previously mentioned by Sander, we continue to expect net sales to sit in the range of EUR 4.58 billion to EUR 4.63 billion, corresponding to a growth of 0% to 1% and then adjusted EBITDA of around 15% and leverage guidance, we confirm our target of 3 to 3.5 range.

With this, I hand over back to Sander for the remaining of the presentation.

Yes, Marco, thank you very much.

So, I wanted to provide a brief update on the strategic direction, and I wanted to come back on some examples of key initiatives which we have deployed in the, let's say, in the current quarter or in the recent quarter or in the current quarter.

So earlier this year, before the summer, I already shared with you that we've done a strategic exercise where we have reflected on our performance, on the development in the markets and our expectations in the market and we have looked again at our own kind of strategic priorities going forward. And that has led to, let's say, an evolution of our strategy.

So fundamentally, we still believe that the 3 commercial pillars to be the #1 premium destination in all markets; number 2, to offer the most relevant assortment with clear differentiation; and number 3, to scale the most seamless omnichannel experience. We believe that the combination of these 3 pillars is creating a competitive customer proposition, which will allow us to grow and allow us to create value, let's say, in the markets where we currently operate. And that should be based on a foundation where we're building a united future-proof foundation for sustainable and profitable growth going forward.

So, on this page, not a lot actually changed in the exercise which we did before the summer. And maybe the most important word, what we added to this page is clear differentiation because we do see the development on the online side and the fact that a number of the premium beauty brands have authorized, let's say, a few players as well that it's important to strengthen the differentiation dimension in DOUGLAS and especially to work on those brands which are unique to DOUGLAS, either Coco brands and exclusive brands. So, differentiation is a key strategic lever going forward.

We've translated these 3 pillars and this foundation in 21 key result areas priorities. And we have basically created an acronym for each of them, brave, clear, scale and united to make it a bit more memorable, not only for you, but also internally in the organization while we're working on this with our, let's say, 18,000, 19,000 people.

And today, I wanted to give you a slight update on those ones which are not hidden. So let me not walk through them because in the examples, which I want which I will give in the next few pages, I will come back on all of them. But for each of those key result areas, we have developed a plan. We have a team in place. We have somebody who owns that, and we're working with a long-term, midterm and short-term perspective on each of them to basically deploy our strategy.

We have also decided that it will be good to go a bit more in-depth into the evolution of our strategy, and we believe that a quarterly update is not the proper kind of environment. So we are planning, let's say, a moment in the fourth quarter of the calendar year, so basically between October and Christmas, quite likely not in the December month, but we will come back to you with more details on the evolution of our Let it Bloom strategy, where we intend to go deeper into a number of the priorities and also with a longer-term perspective. So, we owe you that and we will get back to you.

Today, I wanted to highlight a few initiatives where we have done and delivered a number of visible results either towards our customers or from an internal build and organizational perspective in order to build our foundation. So, the first one is about the first pillar, which is about to develop a #1 position from an omnichannel perspective.

And obviously, we see that social media and social commerce becomes more and more important, not only in the daily life of our customers and citizens, but also in developing premium beauty brands and wanting brands and also growing the sales. And we see a significant step-up within our organization in terms of leveraging the brand power of DOUGLAS and NOCIBÉ, we do see that together with social media and also with creative partnerships and with influence that we can really drive the visibility and convert engagement into, let's say, towards certain brands into tangible sales for DOUGLAS.

And therefore, we also are not only measuring it internally, but also, we are sharing with you externally that our social media and social commerce sales is significantly growing. The absolute numbers are still relatively small, but the growth is certainly there.

By the way, the growth rates are quite different between the different markets because in the German market, for instance, we are more advanced in the social media domain versus in certain CEE markets where we see a positive development across the group, and there's more in the pipeline, and that is one of the areas that we would like to come back on in the fourth quarter of this year. That is basically initiative 1.

Initiative 2 is all -- everything about our assortment. And like I said, we are historically focused on selective brands, Chanel, Dior, Shiseido, Tom Ford, Lancôme, Yves Saint Laurent, et cetera. But within those selective brands, we are focusing more and more on exclusive brands. These are brands which are exclusively being sold by DOUGLAS, either in all our markets or in a number of our markets. So, we have so-called group exclusivities, but we also have cluster exclusivities.

LolaVie is the brand with Jennifer Aniston as kind of the brand personality. Morphe an makeup brands, About-Face an makeup brand. Each of those brands are exclusive to DOUGLAS across all our markets. We started this year with Balmain. That is a brand owned by Estée Lauder, where we have signed an exclusive agreement to basically develop Balmain in the fragrance market across all our markets, and these brands are doing very well.

Fenty Beauty is an example of a cluster-specific brand. So, in the Netherlands and in Belgium, we have an exclusivity agreement with kind of the brand owner. And in Germany, there is only 1 alternative player offering this brand, which is a French competitor, but the French competitor has a relatively small footprint in Germany. Hence, we also have the opportunity to develop the brand. And Orabella is an exclusive across all markets, brands for DOUGLAS again in the fragrance category.

And we really see and we've showed that to you before that our exclusive brand sale is really getting traction. So today, it's 9% of sales. It has grown in this quarter with 14.7%. So basically, if you simplify, it has grown from 8% to 9%. With the 9% of sales, we are unique. That means that we have an omnichannel pricing.

That also means that we don't have price competition because others are not selling it, and that is basically building a USP and it is also building, let's say, protecting a part of our gross profit going forward. So exclusive brands, very important pillar to drive a key result area to drive differentiation.

The third thing what I want to share with you is that also with selected brands, we have, let's say, winners and losers. So, despite the fact that the market is, let's say, in our most important countries, not growing or at least slightly negative when we talk about Germany and more negative when we talk about the Netherlands, we do see a number of winning brands across, I would say, the 4 core beauty categories.

So, in fragrance, Prada, Balmain, Carolina Herrera are clear winners. In skincare, Rituals, the Beauty of Joseon, Erborian, K-Beauty brands, 2 K-Beauty brands, Morphe, Charlotte Tilbury, About-Face, Kérastase, LolaVie, and Milkshake are developing very positively. So, there are winners and losers across all these categories.

What is new in terms of transparency towards you on the next page because we have so far never disclosed our sales performance by category. So, this is the first time that we share with you our sales development in the respective categories. Keep in mind, we have 4 core beauty categories, actually 5, fragrance, skin, makeup, hair care and accessories. Fragrance is roughly 50% of the sales, skin care and makeup roughly 20% of sales, hair care, a strong runner up 4%, 5% of sales and accessories is actually 1% or 2% of sales.

And what you can see that in our biggest category, fragrance that we are down 3.4%, we are down 4.2% in skin care, we're up 1.7% in makeup, we're up 18% in hair care, and we're down 7.8% in accessories. So, the core challenge for DOUGLAS is we feel pressure in 3 big markets, Germany, France and Netherlands. And we feel sales pressure in our #1 category fragrance. And the combination of that is clearly leading to the top-line pressure as we are currently experiencing it.

I also showed to you on the slide before that within those categories which have declined, there are brands strongly growing, but that is not offsetting the decline kind of other brands. So, it is a mix, let's say, you would say, a mixed performance across these different categories.

On the next page, we want to show you an example or there is 2 page actually of our desire to build a seamless omnichannel customer journey. So, what we do see is a strong growth of our cross-channel services, which underscores, we believe, the attractiveness of the omnichannel model and also the desire of customers to really shop omnichannel. And be aware, in the vast majority of the shopping trips, a brick-and-mortar store still plays a very important role. So, the pure-play only trips is a significant smaller percentage of, let's say, customer behavior until now.

We are currently offering 4 different omnichannel services. The first one is Click & Collect. A customer goes to our website, shops online in the assortment, which we have available in our warehouse. And within a few days, that product can be click and collected either from a store or from a pickup point or in some cases, from another retailer and Click & Collect is growing 4.1%, sits in our e-commerce sales.

The second service which we offer is Click & Collect Express. A customer goes to the website, selects a store and can shop within the assortment of that store. An average store of DOUGLAS has somewhere between 6,000 and 11,000 SKUs. The warehouse in Germany carries 60,000, 70,000 SKUs. So, the customer here can shop in a smaller portion of our assortment.

But the benefit is the customer can pick up the article within 2 to 3 hours from the store of his or her choice. And we do see a significant increase of the sales. There are 2 drivers for that. The first driver is we didn't have the service or we don't have the service yet in all the markets. So, we're rolling out there is basically a ramp, you could say, an expansion dimension. But secondly, we also see a like-for-like that's in development.

This sales is also being reported within e-com. You could debate should we report it in the store channel or should be reported in the e-com channel because both channels actually play a role. And ultimately, do the transaction, let's say, in the store because that will pick it up, but we just decided to report it in the e-com channel. If we would have swapped it to the store channel, clearly, e-com sales would grow less and store sales would grow more.

The third part is on in-store orders. A customer goes to a store and wants to buy an article, which maybe is not available in the store because we only have 6,000 to 11,000 articles or one of those articles is out of stock. And then the customer can order in-store and then get it home delivered or also pick it up in that store on another store.

The last service which we are now starting to pilot is Click & Return. You bought something, you're not happy with it and you can return it to a store. The combination of all these services is growing 18.2% and it's 6.6% of our sales. So again, it was 5% of our sales. It's now 6% of our sales and the pure players don't offer kind of new services. So, another, I would say, example of differentiation and developing very positively.

Moving to basically the next initiative is focusing on omnichannel and e-com. We are accelerating our e-commerce transformation -- sorry, our omni channel transformation with an increased focus on e-com to reflect the preferences of our customers.

And in June 2026, we've launched an AI-enabled beauty adviser in our German app and our German online store where basically a customer can talk with this adviser, communicate with this adviser and our AI adviser is giving, let's say, personalized advice and also personalized duty recommendations, obviously, also making recommendations with products and brands, which we offer, which we sell. So, there's a request from the customer or a problem or a demand, and we try to cater towards that demand by making a tailor-made advice and hopefully also sales transaction.

As I already said earlier, the stores remain a crucial pillar of our omnichannel model because you can see on the top right, in 75% of all the customer journeys, the store is still playing a role. Despite that strong, I would say, USP, we cannot deny that the store channel in beauty in general is under pressure and that also our like-for-like sales is under pressure.

And that has led to the conclusion that we need to -- that we have decided to review our store network across the entire company and that we're not only, let's say, looking for on the one hand for opportunities to remodel, expand or relocate existing stores, but we're also reviewing stores which are below a certain profitability, either because the store is underperforming or because the store sits in an area which is basically under pressure. And that network review will certainly lead, let's say, to an optimization effort of our store network in a number of specific countries.

It's too early to communicate specific conclusions on that because we are still working on that. Clearly, there are landlords, store management, employees involved, but we want to do this properly before we are becoming more transparent on it.

In the current quarter, we have opened 15 stores. We've also closed in the current quarter 19 stores. 19 stores is a relatively big number because this was the quarter where we closed almost half of the Akzente store network, if I say correctly, 9 -- 11 stores we closed out of the 19 are Akzente stores. So, these are, let's say, stores in Germany. So, you could say our regular closing was 8, which is not a kind of strange number. And we have, in this quarter, refurbished, including relocation, 19 stores, which means that we ended the quarter with 1,967 stores.

On the next page, building a solid foundation. Our supply chain transformation is well underway. We also informed you already a few quarters ago that we have opened a NOWAC and OWAC for the north part of Central and Eastern Europe, that is a warehouse in Poland. The warehouse has successfully started to supply our Polish stores and our Polish e-commerce customers. And since a few weeks, we have also connected this NOWAC warehouse to Czech and Slovakia.

So, we have now closed our online warehouses in Czech and Slovakia. We closed our coworking facility in Czech and Slovakia, and we supply in these 2 countries from the warehouse. And in the next few weeks, we will also do the same with Hungary, where that means that in a few weeks from now, the NOWAC is supplying all countries with the plan to connect them to the Baltic countries, Czech, Estonia, Latvia, Lithuania in 2027. And with that, our NOWAC implementation will be complete basically in the year ahead of us.

In addition to that, our service provider has implemented a new warehouse management program, management system into the warehouse. And we have also automated the warehouse in recent weeks. Automation often comes with some turmoil. So, we also have to admit that for at least 4 to 6 weeks, we have a significant implication on our service levels towards our customers, in this case, in Poland, which has certainly impacted our sales development in the month of June and it has also impacted the sales development in Poland in the month of July.

As we speak now, we have the situation under control. Service level toward stores are at the required level. And in the e-com channel, we're still slightly behind, but we are rapidly catching up.

In the month of August, we are now in August, we will open our we have opened our BeNe OWAC. This week, we have delivered the first stores from our newly developed warehouse in the Netherlands. And in the next few weeks, we will ramp up from a handful of stores to all the stores in Belgium and the Netherlands. And in calendar Q1 2027, we will migrate also the e-com part.

So, for the rest of this quarter, stores will be done by the BeNe OWAC in Belgium and the Netherlands and the online customers will be done still by our legacy facility. In early 2027, we will close this old facility and also integrate them into this new OWAC warehouse. And that would mean -- that means that we will then have 6 or 7 OWAC in operation, 1 to go.

The final one is called the SOWAC. That is the OWAC supporting the south part of CEE for the Balkan countries, i.e., for Bulgaria and Romania. It will be a much smaller OWAC because our volume is smaller. We intend to open this OWAC in Romania, quite close to Bucharest.

And we're currently finalizing a tender. Actually, I think that this week, we will communicate our preferred partner of choice. And then the intention will be that roughly 1 year from today, this OWAC -- SOWAC in the South will also be operational. So, a lot of developments on the supply chain side. And then basically in 5 years, we migrated from a legacy supply chain where each country had their own supply chain, and we have duplicated between online and offline to 7 omnichannel warehouses, 1 warehouse, stock supporting 22 different countries.

The last point I wanted to talk about is about the technology part because we continue to make progress in harmonizing our infrastructure. In this case, we talk about the IT infrastructure. Marco was already mentioning an example of the launch of our e-com platform in Romania. So that means that as we speak, we have the same e-com platform active in 14 of our countries. Basically, all our big countries and only the small countries are, let's say, on the to-do list.

Klarna is currently supporting 13 markets and Adyen is currently supporting 17 countries. 2 years ago, we had a different every country had its own online payment provider. So basically, we had 22 different payment providers. Currently, Adyen is our preferred provider doing 17 countries and a few are still to come. So, a lot of rationalization, simplification and standardization in the back office, let's say, I would say, of DOUGLAS.

With that, I wanted to summarize basically our presentation for today. So firstly, the premium beauty market has significantly slowed down in terms of growth versus what we saw 3, 4 years ago. It also slowed down much faster than we had expected. We had expected a market which would grow 4%, 5%, 6%. But the reality is that the market in Continental Europe is growing 2% to 3%. It is not growing in our most important or biggest countries, Germany and France. The Netherlands is not the biggest country, but it's a relevant country, and that weighs heavy on our performance.

Secondly, we do see a continued consumer price sensitivity and a desire of customers to buy products at a discount. So I haven't said that before in this meeting, but we are not actively promoting more customer is actively seeking more promotional deals, and that leads to pressure on our gross profit. And in addition to that, we see an acceleration of the online channel where the competitive price is just one click away. So that puts more, I would say, a focus on pricing going forward.

We are making adjustments to align our business even more closely with the development at both customer and market level with an increased focus on e-com and a structure assessment of the profitability of our store network, and that will lead to a number of conclusions and decisions.

We are focusing on what differentiates us, exclusive brands, cross-channel services are 2 examples where we showed where we've given you some insights. We have a lot of brands which are growing. We are growing strongly in Retail Media, but today, we didn't give you too much insight in that. And we are positioning the DOUGLAS for the future with the plan to do a further update on the evolution of our Let it Bloom strategy in the fourth quarter of the calendar year 2026. And last but not least, we are confirming the full year guidance for the current financial year.

With that, I wanted to pause, and we would like to move to Q&A. So, operator, please take it from here.

[Operator Instructions] The first question comes from the line of Vandita Sood from Citi.

I just have 2 questions, please. I think firstly is on the guidance. You've reiterated the guidance. But if I work out sort of the midpoint, it's pointing to a positive sales development in 4Q and at the midpoint of the adjusted EBITDA, it's maybe slightly ahead of where consensus is at the moment for the fourth quarter. So just want to check, is this something that's based off of what you're seeing currently as of July and start of August? Or is there not that much to read into it and it's within range, so you're happy with the range?

And then the second question, we've talked a lot about how important the assortment is and brand is of course, that's key. I just wondered where you benchmark your delivery proposition as more and more sort of pure players are coming into the market. Are you happy with the cutoff time for next-day delivery orders? Are you competitive in terms of the convenience of the online proposition that you have? Just curious your thoughts there.

So, Vandita, thanks for the questions. I'll take the first one on guidance, and then Sander will take the second one on the assortment and the rest.

So, we updated our short-term guidance in mid of June, pointing now to a much narrower range, let's say, 0% to 1% of growth. of course, at the time, we had the benefit of the knowledge of well into Q4 expectation performance. And by the way, when you work out in your math, it is sort of a continuation of Q3 into Q4, you also fall within the ranges of the guidance and get to the lower end of that.

At the same time, let's say, to your question, we feel comfortable with the range as it stands now as well as with the consensus where it sits. And therefore, we don't feel need of updating it any further as of today. That's for the topline and also for the profitability percentage.

In the last closing quarter, we reported a profitability reduction at adjusted EBITDA level of around 280 bps again, working out the math into Q4, a comparable year-on-year decline into Q4 still basically would lead you to the around 15%. For the full year, basically, hence, our reasoning on the confirmation of the guidance today.

And I would give to Sander the answer to the second question, if that's answering your question, Vandita.

Yes.

Thank you, Marco. So, Vandita, regarding the e-com delivery proposition, generally, we believe we know that we are competitive versus, let's say, the beauty players in terms of omnichannel beauty players or pure play let's say, other pure-play beauty players. We have the ambition to deliver in maximum 2 working days. And with that, let's say, and we are delivering that in many of our markets, but not yet in all our markets.

In some markets like the Netherlands, if you order before 7:00 a.m. today, in principle, you get it tomorrow, the delivery basically window is 24 hours. But in Germany, a significant portion of our orders is being delivered on the second day rather than the first day. So, we continue to work to shorten the lead time and the deployment implementation of our 7 OWAC is going to help us with that.

Secondly, what we can offer is click & collect, click & collect in our store network and Click & Collect in Express, we believe that we are competitive and we have something unique to offer, certainly towards some of the pure players.

And thirdly, from a cost perspective, we also believe that we are competitive. So, below a certain price, you have to pay a small delivery fee above a certain and you get it for free, and we also competitive with that. So, in that sense, we believe that we are in the right -- we are in an okay place, but we see opportunities to further improve our competitiveness going forward.

Does that answer your question, Vandita?

Yes, that's very clear. It was just on the basis of, obviously, if you look at something like an Amazon at just at 10:00 a.m., 11:00 p.m. cutoff time. But yes, no, it's clear that there's pros and cons.

[Operator Instructions] The next question comes from the line of Jurgen Kolb from Kepler Cheuvreux.

The first one is -- Sander, I think you mentioned in your prepared remarks on your new strategy that you obviously analyze the market. I was wondering if you could share maybe some of your findings, especially when it comes to the competition. I remember in one of the previous calls many months ago, you indicated that this fierce price competition triggered by Flaconi and Notino that they cannot sustain that pressure for long.

I was wondering if you have any findings, any ideas as to how they can really continue with this very aggressive pricing because it looks a little bit odd that you guys who have retail media, who have other levers of profitability that they can still maintain this aggressiveness in the marketplace. That's the first one.

Second one, you mentioned the store network review. Any idea or any indication as to how many stores we're actually talking about that are loss-making? Or maybe could even fall into the criteria to be closed? Just roughly, I know no details.

And the third point is maybe if you have some comments on the different profitability levers of selective brands, exclusive brands, cluster brands. Obviously, there is some difference, but I'm not quite sure how much you want to talk about it, but at least some indications where the attractiveness is besides, obviously, the fact that you are unique from the offer perspective.

Yes. So, I would propose, Marco, that I will take the first question, make you will take the question on the store profitability and the profit of the different brand segments.

Yes.

So Jurgen, when you talk -- look at the competition, I can easily talk about it for a long time, but I don't want to talk for many minutes, I don't want to do that.

First of all, and we do see that the developments in the market and certainly, the pressure on the store channel is leading to, let's say, activity in the market. So last -- let's say, this year, early this year, 1 of our regional competitors basically went into administration and subsequently rationalized the store network and has then subsequently been taken over by a French beauty company.

We've also noted that Marionnaud, so let's say not so long ago, the #2 in France after the #3 in France has apparently made a deal with a French beauty entrepreneur as well. So, they're changing from one company, let's say, to another company.

And we also know there are quite some, let's say, stationary focused businesses either under pressure or for sale and because we are often being confronted or being offered, let's say, some of those businesses. So, we can see in the store channel that the pressure in the market is leading to, let's say, dynamic developments.

If you look on the e-com side, there is, you could say, a consolidation taking place. So, there are a handful of competitors who are aggressive in terms of price, who have gained share over the past -- not only the past few years, but also in the current financial year. And those competitors are much more aggressive with price. And those competitors do not have neither the opportunity nor the burden of having a store network.

And because when we are pricing our products, we always need to keep in mind that we have an omnichannel proposition and that makes it sometimes more complicated. That's also why we are focusing so heavily on, let's say, on the USP, on exclusive brands, on corporate brands where we don't have this kind of direct price competition.

So, on the e-Com side, we -- and you mentioned a few competitors. I prefer not to mention, let's say, them specifically by name, but we indeed have doubts whether those pricing levels are sustainable. It's certainly not healthy for the category and it's also certainly not healthy for the brands, but we have to deal with it.

And having said that, we are also actively looking at our pricing strategy going forward. And because with the developments in the market and also the development at customer level and the development of our sales, we cannot deny that we need to work on the competitiveness of our proposition and pricing is playing an important role in that going forward.

With that, Marco, I'm handing over to you.

Yes. Thanks, Sander. Jurgen, so on your 2 questions, I'll start with the stores. So, first of all, we should bear in mind that we have -- despite having a large store network footprint, we have a profitable store network footprint.

And we do, let's say, suffer in the recent quarters by negative like-for-likes, which unavoidably have an impact on, let's say, the single channel profitability because despite we implement several efforts to safeguard costs in the stores, and I'll give you an example, the like-for-like year-to-date store costs are stable or slightly down compared to last year.

However, year-to-date, the like-for-like of the stores is minus four, as you could see today. And so obviously, with also pressure on the margins in terms of gross profit margins, it's inevitable that the relative profitability has gone slightly down.

This creates a situation in which still, in any case, the vast majority of our network is in a healthy position and in a profitable, let's say, situation. The actual number of stores, if you just run the numbers and look at them that, let's say, as of today are loss-making is a very small percentage. But of course, as part of our careful assessment of the healthiness of the network, we take into account the current and expected evolution of it to take the best decisions going forward.

Secondly, we've opened also a lot of stores in the last 3 years, covering many white spots. So, we also have to expect some time to allow these stores to get to a run-rate sales level so that they become not dilutive but accretive into the profitability percentage of the channel. But of course, I acknowledge that when you look at the consolidated numbers, these are basically hitting-on the bottom-line profitability percentage.

But it's always been our expectation to, in any case, now slow down this expansion path. And coupled with the review of the stores, let's say, we will come back with better guidance on the future evolution of the store network. But let's say, right now, in the last quarter, we have a stable network or a slight reduction of the store network, minus 3 when we look at the March versus June, let's say, network size. And also, since September, the network just grew barely.

And of course, in the future, we would not expect, let's say, a net growth in a way. So, for being more precise and also, we want to be cautious into saying exact numbers of how many are positive or negative. Again, I can hint that the actual negative is a small fraction in the total, but the assessment will be complete and broad to also go towards the customer movement.

On your last question on the profitability of the selective, exclusive and corporate brands, so we run, let's say, those businesses, let's call it businesses, but those segments on -- not only for the customer loyalty for sure, they are also accretive on a percentage basis in terms of the margin.

As you would expect, the own brands deliver a significantly higher gross margin compared to the third-party brands without being very precise, but let's say, well into a double-digit number higher profitability percentage compared to the blended average of our 43% to 44%, say. When we look at the exclusive brands, these are also oftentimes accretive in terms of margin.

Why do I say often? Because in this moment -- in this situation, it depends on the type of brand or on its distribution globally in the continent, et cetera. And normally, we benefit from the fact that they are less discounted anyway, because we only sell them.

So, they -- both the exclusive and the corporate brands tend to be accretive. Of course, own brands and corporate brands tend to be significantly accretive. And therefore, our focus on growing their share will be a margin protection because we have to acknowledge that on the third-party brands, competition is there to stay, and therefore, we need to, in a way, fight against the dynamic.

I hope we're addressing your question, Jurgen.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Sander van der Laan, CEO, for any closing remarks.

Yes, operator, thank you very much.

So, I want to thank everybody for your attention. It has not been an easy quarter in a challenging marketing environment. We continue to work on this, not only as the management, but also with all our people in the stores, online and offline. We look forward to come back to you in the course of the calendar quarter 4. And I wish you a great day and hopefully see you or talk to you soon again. Bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the DOUGLAS Group Q2 2025-2026 Earnings Results Conference Call. I am Matilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded.

At this time, it's my pleasure to hand over to Sander Van der Laan, CEO.

Yes, operator, thank you very much, and good morning to all of you.

On behalf of myself, Sander, the Group CEO; and Marco, our Group CFO; but also, Dafne, our Head of Investor Relations, is present here in this room. And we are here today to give you an update on our financial performance for the second quarter of the financial year '25-'26. But we also want to put it in the context of our strategy, and we also want to highlight you some of the initiatives which we have taken or which we are about to take.

We also realize that we're doing this against the background that we have made an ad hoc announcement roughly two weeks ago, where we have made a number of statements or publications already on an update on our guidance and also on a goodwill impairment, which we are on the impairment which we are taking on NOCIBÉ and Parfumdreams, and we will come back clearly on those topics also today.

So, I will give -- maybe let's move to the next page. So, I will give a brief introduction. Then I hand over to Marco, who will provide an update on the financial performance for the quarter and basically for the first half year. And then I will come back to share an update on the strategic plan of DOUGLAS, and I want to highlight some of the initiatives which we have taken or which we are about to take. And then we want to give you the opportunity for a Q&A. That is basically the agenda.

So let us move to basically the summary of last quarter. So, in the second quarter of '25-'26, which, by the way, is the quarter where we cycled a tough quarter in the year before. Just to refresh your memory, in our Q1 '24-'25. We did actually relatively well. We delivered kind of 6% plus top line growth. But the second quarter, which is the quarter which we cycled now was a tough quarter, where we had a slight even decline in that quarter, partly, by the way, driven by Easter and also by the planning of that, the 28th of February in the year. It was a leap year.

But anyway, in this quarter, we are now cycling a weaker comparison and that obviously would create the expectation that it should be possible to show a kind of a stronger number. And in that context, we, let's say, would have hoped for a higher sales number than 1.1%, but we delivered growth of 1.1%. We have seen that this is driven mostly by E-Com, where especially in E-Com, our cross-channel sales, which is, by the way, largely generated in our stores has been contributing to it.

And we also have seen that our net result is significantly impacted by the goodwill impairment and store asset impairment relating to France and a goodwill impairment on the brand Parfumdreams, not on Niche Beauty. Marco will come back on those two specific impairment charges.

That has led to an overall performance in terms of 1.1% sales growth. The stores overall being slightly up with a negative like-for-like in most countries on the store base and a positive contribution of our network development, i.e., opening stores, closing stores and refurbishing stores.

E-Com 2.4% up, including cross-channel services, an EBITDA margin of 12.2%, which is EUR 116.1 million, an adjusted net result of minus EUR 10 million, a reported result of EUR 124.6 million, and we will update you on this impairment. And the net leverage, which is, you could say, broadly stable versus last year, which was, by the way, driven by slightly lower debt and a better cash position but the fact that our EBITDA has declined has contributed to basically this 2.9 leverage for the quarter. And again, Marco will come back on most of -- all of those numbers, and I would say a bit more.

We also want to reiterate to you that we do see that the premium beauty market globally, but also in Continental Europe is adapting to what we call a new normal. What do I mean with the new normal? Post-COVID, we saw basically three years of strong recovery of premium beauty globally and also in Europe with basically double-digit growth rates in three consecutive years.

And within that market, the store channel actually gained share again vis-a-vis the E-Com channel because the E-Com channel had an acceleration during COVID and that kind of normalized in that first period. But since year and a half years, we are noticing a significant slowdown of the premium beauty market across Europe. So last year, you could say the market has grown somewhere between 3.5% and 4%. This is last year. In the more recent months, we see a lower number of that, but there is still growth in premium Beauty Europe.

The challenge for DOUGLAS in that slower growth market that especially our more mature markets, i.e., Germany and France, are really on the lower end kind of the growth spectrum. So, in France, we have seen a decline in the market over the last financial year. We see a continuation of the decline in the first basically seven months of the new financial year. There are some periods where it's slightly up, but then it's probably driven by different events or phasing of events. But in most markets months, the market has been down.

And in Germany, you could say that at best, the market is considered to be flat. And there is also seasonal impact. So, for instance, in March, the market was slightly better in Germany. But in April, we've just seen that premium beauty was down 7.7% just in the month of April driven partly by Easter. There's a bit more Easter sitting in the sales of the market in March.

But we also do see that customers are very, very hesitant and that basically customer confidence is at the lowest point for many years in a number of our big markets. And clearly, the global socioeconomic situation, the situation in the Ukraine, the upcoming new energy crisis, the situation in Iran is not motivating people to spend significant amounts of money on discretionary stuff.

So basically, I have now addressed the first two points of what I call the new normal.

The third thing is that we do see that the E-Com channel within that muted market is doing better than the store channel. We also see that, by the way, in our own numbers. But what we also see that in the E-Com channel that pure players and marketplaces are challenging the selectiveness of certain beauty brands.

We do see, for instance, that a large American-based company who invented an online bookstore in the past is now also starting to sell more and more premium beauty brands in Continental Europe. And clearly, that creates an impact, let's say on the competitive landscape. And it also requires a more strategic reaction from us, and I will come back on that a bit later.

And then last but not least, in a market which is under pressure where the brands feel the pressure and all the retailers feel pressure on their top line, that is also an environment where customers are seeking more a promotional deal and where retailers and brands are fighting for sales. Hence, there are two drivers which have an impact on kind of the gross profit development of retailers and specifically of DOUGLAS.

So, we actually want to stop kind of, let's say, blaming between the tough market environment. We consider this market environment to be the new normal. And our plan for the short, the mid and the long term is supposed to address the challenges and also opportunities, which we do envision in this market.

So also, in our financial planning for the years ahead of us and our strategic plan for the years ahead of us, we do not expect that this market environment will change very quickly. We don't expect that the Ukraine or the Iranian war is going to be solved quickly. And we do expect that customers will, let's say, continue to become more digital. Hence, in our strategy and our initiatives, we will also address that. I will come back on some of this a bit later in the presentation.

On the next page, we are basically summarizing the key message from the ad hoc announcement, which we have made two weeks ago. So, we are working with a short-term guidance with a sales range between EUR 4.65 billion and EUR 4.8 billion. That was already the guidance from the beginning of the year, and we still stick to the guidance, although it is more realistic to expect that we will finish at the lower end of that range by the end of this financial year.

From an EBITDA perspective, we have changed our guidance from around 16.5% to around 16%, which is partly a reflection, you could say, of the trends in the first half of the year and especially the gross profit development and it's also partly a reflection of the deleveraging, which we expect if we will end up at the lower end of the sales range. So that was a change which we communicated two weeks ago.

And from a net leverage perspective, it's basically the result of the developments on the left side of this slide. We still expect to finish within the bandwidth between 2.5x and 3x. We are actually at 2.9x after basically the second quarter. So, this is the guidance change which we have communicated last week. So, there is nothing new versus our announcement of two weeks ago.

With that, I'm handing over to Marco, who will shed some further light on the financial performance in the second quarter and the first half of the year.

Thank you, Sander. And we go to Page 7 and let me walk you through our group performance for the second quarter of financial year '25-'26.

Starting with the sales. Group revenues increased to EUR 950 million, up 1.1% year-on-year on a reported basis. However, on a like-for-like basis, sales declined by 1.3%, reflecting a still challenging consumer environment. Looking at channels, stores sales grew by 0.5%, while E-Commerce continued to outperform, increasing 2.4% year-on-year. And from a regional perspective, growth was primarily driven by CEE, up 5.9%, and DACHNL up 1.4%. And these positive trends were partially offset by declines in PD/Niche Beauty and Southern Europe.

Turning to profitability. Adjusted EBITDA was equal to EUR 116 million compared to EUR 122 million last year, representing a 5.1% decrease. And as a result, our EBITDA -- adjusted EBITDA margin declined from 13% to 12.2%. Increased consumer price sensitivity continued to put pressure on gross margins. And while we maintained a strong cost discipline, which helped to partially offset this margin pressure, some dilution remains. This is mainly due to expansion-related costs not yet being fully absorbed with the recently opened stores not yet at their run-rate sales levels. In summary...

[Technical Difficulty]

So, I would like to continue on Slide #8. So, at group level, sales increased by 1.1% to EUR 950 million. Price increases in both channels supported top line growth, although this was partially offset by volume declines, resulting in a negative like-for-like development of minus 1.3%. A very encouraging development was cross-channel services such as Click & Collect, which grew by 29.8% year-on-year, underlining the strength of our omnichannel proposition.

Our stores remain the largest channel, accounting for 66.3% of the group sales, slightly lower than last year. Store sales increased by 0.5% year-on-year, mainly driven by new store openings and refurbishments. However, this growth came despite lower footfall and lower conversion rates, which continue to reflect a cautious consumer environment. We were able to grow our market share in Germany and France, among other markets.

Turning to E-Commerce. Performance was clearly stronger. Online sales grew 2.4%, increasing the channel's share of group sales to 33.7% and growth was driven by higher number of orders and a higher average basket size with a particularly strong contribution from the DOUGLAS app, which continues to gain relevance in customer engagement.

Sales through the DOUGLAS app increased significantly, now accounting for 43% of total E-Commerce sales, underlining the growing importance of our mobile channel. In summary, Q2 growth was primarily driven by commerce momentum and network expansion, while underlying demand, especially in stores, remains subdued. Strengthening traffic, volumes and further leveraging omnichannel capabilities remain our key focus areas going forward.

Moving on to Slide #9. We show the performance of our segments in the second quarter in terms of sales and adjusted EBITDA margins. Starting with sales. Growth was achieved in two of the five segments. Central and Eastern Europe once again delivered the strongest performance with sales increasing by 5.9% year-on-year, confirming its role as our main growth engine. DACHNL also remarkably recorded a moderate growth of 1.4%. In contrast, France remained broadly stable with a slight decline of 0.4%, while Southern Europe and PD/Niche Beauty continued to face more challenging conditions with sales down 1.3% and 2.1%, respectively.

Turning to profitability. Adjusted EBITDA margins came under pressure across most segments, and the decline is mainly driven by lower gross margins, reflecting high promotional intensity and continued customer price sensitivity. CEE continues to deliver the highest margin level despite a year-on-year decline. DACHNL and France also saw moderate margin erosion, while Southern Europe experienced a more pronounced decrease. In PD/Niche Beauty, margins remained slightly negative despite showing strong improvements, highlighting the competitive pressure on our pure-play E-Commerce segment continues to be very high.

Moving on to Slide #10 and zooming into the building blocks of the gross profit evolution year-on-year. Gross profit decreased slightly from EUR 425 million to EUR 423 million, while the margin declined from 45.2% to 44.5%. Looking at the individual drivers, we saw a positive volume and sales effect of EUR 3 million, reflecting, of course, the higher sales. However, this benefit was more than offset by a negative price promotion and mix effect of EUR 11 million. This clearly highlights the ongoing impact of discount-driven sales and increased promotional intensity continuing to weigh on margins.

On a positive note, supply contributions increased by EUR 5 million year-on-year, providing a partial relief in underlying the constructive collaboration with our brand partners. Nevertheless, these positive supply effects were not sufficient to fully offset the margin pressure from pricing and promotions.

Let me now turn to the development of our net operating expenses. In a context in which top line is not growing as fast as in the past and gross profit margin is under pressure, we made significant efforts to manage our costs and results are visible.

With a 1.5% year-on-year growth, net operating expenses growth is only slightly above top-line growth despite the number of stores opened in the last 12 months. In fact, when we look at the like-for-like perimeter, net operating expenses are actually below last year, ensuring a stable cost to revenue ratio. When stores opened in the last 12 months reached a run rate potential, we also expect a corresponding benefit on the cost to revenue ratio, thus enhancing our margin.

Looking at the components, staff costs increased from EUR 180 million to EUR 192 million, and this reflects our network expansion and the net effect of variable compensation. As a result, the staff to cost revenue ratio is slightly higher year-on-year. At the same time, we're actively managing this through efficiency measures, including reduced working hours in stores with declining footfall, temporary staff cost reductions and scaling new store openings. This allows the like-for-like store perimeter to actually show a slightly lower year-on-year staff cost base.

On the other hand, other net operating expenses decreased by approximately 7% from EUR 123 million to EUR 115 million. This improvement is mainly driven by more efficient marketing spending in some of our geographies, leading to a better marketing cost ratio. Property cost ratios improved slightly, but we achieved further efficiency gains in IT costs despite ongoing investments in our technology stack. Finally, last year, we had a low single-digit million-euro amount of one-off negative effects related to past accruals that are not happening again, of course.

Moving on to Slide 12. Let me now walk you through what is driving the non-recurring charges in the first half. This is linked with the updated guidance for financial year '26 that we issued on April 30th, generating certain implications also on asset impairments. During our impairment testing and in light of the evolving market conditions, we identified a goodwill impairment primarily related to our French business for EUR 87 million, but also platform games for EUR 12 million. As a result, we recorded a non-cash goodwill impairment charge of approximately EUR 99 million in the period.

In addition, we also recorded certain store asset impairments for a total of EUR 14 million, again, mostly in France. These impairments reflect changes in key assumptions, including market conditions and growth expectations rather than any immediate or sudden change in the underlying operational performance of the business. And naturally, these charges do not affect our cash flow, cash position, liquidity or compliance with any debt covenants.

From an operational standpoint, our French business continues to deliver a remarkably solid P&L and cash flow contribution, however, and we remain very confident in its long-term strength and positioning. Excluding these non-cash charges, our underlying adjusted EBIT was equal to EUR 19 million.

Moving on to our full P&L for the quarter as a synthesis of the previous comments, revenue continued to grow in Q2 despite the decline in like-for-like sales, supported by selective store openings, E-Com and a strong growth of omnichannel services and exclusive brands. Despite active cost management, adjusted EBITDA decreased around 5% year-on-year, reflecting gross profit margin pressure.

Significant one-offs primarily related to goodwill impairments led to a negative EBIT of EUR 101 million and EBITDA adjustments of EUR 6.8 million were also incurred primarily relating to the implementation of strategic initiatives and also the accrual for the expected costs for the closure of roughly 10 Akzente stores that we announced recently.

Below EBIT, the financial result is slightly worse than last year mainly due to FX effects, while financing interests are actually slightly lower than last year themselves. And taxes came in with an effective rate of 29.7% before goodwill impairment, in line with our expectation. And overall, this resulted in a reported net loss of EUR 125 million, however, corresponding to a net loss of EUR 10 million on an adjusted basis.

Let us now look at our net working capital and CapEx. Average net working capital decreased from EUR 240 million to EUR 161 million. That as a percentage of sales means a decrease from 5.3% to 3.5%. Days of inventory outstanding were stable at 123 with an increase in inventory driven by the store network rollout, however, compared with a higher cost of goods sold in basis.

The main driver behind the reduction in net working capital was again the rollout of our supply chain financing program, which as of March 2026, the utilization of the program amounted to EUR 148 million compared to EUR 60 million as of March 2025, hence contributing to the last 12 months average in the calculation accordingly.

Turning to CapEx. Investments in Q2 decreased from EUR 36 million to EUR 26 million. And as previously indicated, fiscal year '25 was a peak year for our store investments, and we do expect this year to end slightly below the EUR 150 million original expectations, mainly due to a more selective approach to new store openings in line of the footfall development in many of our markets. CapEx continues to be allocated to store refurbishment and new store openings, but we do plan a greater shift of investments towards technology and international commerce activities going forward.

In summary, we delivered a strong improvement in net working capital efficiency while maintaining discipline and focused investment activity. And this supports our liquidity position and provides flexibility as we continue to invest selectively in growth and strategic initiatives.

Let me now walk you through our free cash flow development for the first half year of fiscal year '25-'26. We start with an adjusted EBITDA of EUR 450 million, capital expenditure of EUR 71 million on a cash basis, while net working capital has a larger negative impact of EUR 83 million, mainly driven by operational dynamics.

Taxes of minus EUR 25 million and other items that contribute for a positive EUR 32 million, mainly linked with change of provisions. As a result, we reached an adjusted free cash flow of EUR 303 million, in line with last year in terms of EBITDA to free cash flow conversion, which sits at around 65%. After EBITDA adjustments and property rent payments of EUR 168 million, we arrived at a free cash flow post-property rent of EUR 127 million.

Looking at our net debt and leverage structure, we report as of the end of March a slightly lower net debt, however, driven again by lease liabilities. Total net debt increased slightly from EUR 2.19 billion to EUR 2.16 billion year-on-year. And within this, net financial debt was reduced significantly from EUR 1.01 billion to EUR 852 million. This reduction was achieved through strong cash generation and also the use of our supply chain financing program, which supported liquidity.

At the same time, lease liabilities increased from EUR 1.18 billion to EUR 1.3 billion. This increase mainly reflects new store openings and lease contract extensions and is therefore directly linked to our ongoing store network expansion strategy. However, this value has been stable since September, and the year-on-year growth is slowing down as, of course, the opening pace also decreases.

Looking at net leverage, it increased slightly to 2.9x compared to 2.8x last year, again, primarily due to IFRS 16 lease liabilities because on a pre-IFRS 16 basis, net leverage is actually stable at 2x. So, in summary, our balance sheet remains robust, and we continue to combine disciplined debt management, focus on cash generation and targeted investments in growth, ensuring sufficient financial flexibility even in a challenging market environment.

Final slide is a reaffirmation of Sander's slide before on the outlook of 2025 and 2026, which we updated on April 30th. Given the current trading environment, we refined our expectation. And for net sales, we now expect to reach the lower range between EUR 4.65 billion and EUR 4.8 billion, corresponding to a 1.6% full year growth. And starting from a 1.5% year-to-date sales growth, it implies mathematically a 1.8% growth in the year to go.

On profitability, we anticipate an adjusted EBITDA margin of around 16%, reflecting continued pressure on gross margins, while we remain disciplined on costs. And again, taking into account the year-to-date EBITDA margin, this would imply a year-to-go margin of around 20 bps lower than last year.

Regarding our capital structure, net leverage is expected to be at the upper end of the range, hence approximately 3x. We're actively managing the levers within our control to support this. In summary, despite the external environment remains challenging, we're focused on the protection of profitability, strengthening the cash generation and maintaining a disciplined approach to capital allocation.

This concludes my part of the presentation, and I hand over to Sander to talk further about our strategic initiatives.

Yes, Marco, thank you very much.

So roughly three years ago, we have basically launched our, at that point in time, new strategy, which has had and still has the title, Let it Bloom and which was basically focusing on four pillars. And the plan was and still is to build the strongest omnichannel premium beauty platform within Continental Europe. Given kind of the changes in the market environment, the changes in the competitive landscape and also given kind of the pressure which we feel on our financial performance, we are obviously not sitting on our hands and just observing and do nothing.

So, what we've done over the past few months, maybe we can go to the next slide, we have reassessed our four strategic pillars. and all the key initiatives which sitting behind this. And basically, we have made on this page a few, I would say, small modifications, but the core of what we wanted to do, what we are working on and what we want to continue to do remains in place.

The sentences which are highlighted red are changes. So, we stated before, we want to be the #1 premium – sorry, the #1 beauty destination in all our markets. We now just want to emphasize that we want to focus predominantly on the premium/selective segment of the beauty market.

We want to offer the most relevant assortment, but we're going to put more focus on differentiation on brands and products and concepts, which we have and the competition doesn't have. And we still are building an omnichannel experience, but we want to do it in a more scalable way, and we want to make the customer journey seamless across the different elements of our omnichannel beauty ecosystem. And we want to continue to build a foundation which is united and future-proof and which will enable our sustainable and profitable growth for the future. So, these are, you could say, optically maybe a few smaller changes.

But what we've also done on the next page, we've reassessed the 20 initiatives which were sitting behind or which were actually the content of the pillars which we had before. And we have basically decided to eliminate a few of those initiatives to add a few initiatives and to accelerate a number of initiatives. And that leads to a summary, which we call The Brave Plan in Pillar One, The Clear Plan in Pillar Two, The Scale Plan in Pillar Three and The United Plan, let's say, in the foundation, you can also call that a pillar or a horizontal pillar. And clearly, these acronyms are standing for something.

And since we don't want to disclose all the elements of our commercial strategy, first of all, from a competitive perspective and secondly, because we're still working on some of those elements, we decided today to give you some insight into the initiatives where we have written down a full sentence. So, for those initiatives, we want to provide an update today. We are sharing what we're doing or what we're working on. But I can tell you there is more in the pipeline for the stuff which is disclosed and the stuff which is not disclosed on this page.

And you need to see these changes in the context of the changing market environment. Our expectation is that the customer confidence is not going to improve in the short and the midterm. So, we expect that at least for the next 18 months, customers will continue to be very, let's say, negative about their expectations for the future. And against that background, we need to make sure that we're working on the right things.

So let me give you some highlights of what we are currently working on. In the most recent quarter, Q2, we continue to further roll out our new Beauty Card loyalty program, and we are currently active in nine of our countries. By the way, most of these countries are the larger countries. We currently have more than 64 million members in our program. We have added 3 million members since we started to roll out the program in country number one.

So, we can also see that the rollout of the program is attracting new members basically to our beauty program. And we can also see that our Beauty Card sales, let's say, is growing 4.2% versus the prior year, which is significantly above, let's say, the total sales growth of the company. And these Beauty Card members are customers who we know, we know who they are, we know where they live, we know what they shop, and we know what they have spent more in which categories in which brands in which location. So that is, I would say, a positive development of our loyalty program.

The second point that is very much related to Pillar Two, we do see that certain brands are becoming less selective, i.e., especially some few players are starting to sell or are being authorized or are buying products in the gray market, and we compete more and more with few players in the premium beauty domain. And that means that we need to make sure that we continue to create more differentiation in our assortment.

What is the definition of differentiation? Differentiation is first and foremost, our own corporate brands portfolio. So, DOUGLAS COLLECTION, Orebella, Jardin Bohème, one.two.free!, and Dr. Susanne von Schmiedeberg, which are the four brands which we own and which you can't buy anywhere else. That is the first component.

The second component is that we are spending more time and efforts to list exclusive brands and to develop exclusive brands. And the combination of those two elements is currently 15% of our sales. We are not comparable with these brands and with this 15% of our sales. Hence, our USP and our gross profit margin is more protected. And we have a strong desire to accelerate the growth of these, let's say, unique brands towards DOUGLAS.

So, I'm also happy to share that in the second quarter, we launched four new group exclusive brands, Balmain, which is, by the way, a fragrance brand owned by Estée Lauder, Orabella, About-Face and LolaVie, which are not owned by larger companies. And with these four brands, we made a start across all our markets. So, we are selling these brands in all our online stores and in a growing number of our brick-and-mortar stores.

And what we do see is that our exclusive brand portfolio is accelerating. So, we grew in Q2 16.5%. And currently, exclusive brands and corporate brands together is doing 15% of our sales. And we want to continue to grow, let's say, our exclusive brand portfolio, and we want to grow our exclusive brands on a like-for-like basis.

In addition to that, we are still very, very open and also proactive in developing our selected brands. And here, you see by category, some of the, I would say, the winning brands. So, Armani, Prada, Yves Saint Laurent are really in, let's say, in the fragrance domain, making a significant growth spurt, I would say. Rituals, Korean K-Beauty brands like Beauty of Joseon and Erborian are really doing very well. Huda Beauty, Charlotte Tilbury, Armani doing really well.

Kérastase doing fantastically well. It is already doing more than 1% of our sales, and we didn't sell Kérastase in most of our stores until two years ago, but also some other premium hair care brands are doing well. So also in this more challenging market environment, we see winners and losers. And these are the brands which are clearly winning within the DOUGLAS domain.

Two weeks ago, we launched Fenty Beauty first in the Netherlands and in Belgium, online and offline, had a great start. And in the next month in June, we are planning to launch Fenty Beauty in a significant number of German and Austrian stores, both online and offline. So, these are examples of selected brands which having momentum, which also are contributing to the development of DOUGLAS, both from a sales perspective as well as from a point of differentiation perspective.

To give you some insight in the development of specific categories. So, on this page, the five core beauty categories of DOUGLAS are, first and foremost, fragrance, which is more than 50% of our sales. And we are by far the largest fragrance beauty retailer in Europe. And also, fragrance is contributing, I would say, positively to the top line.

Skin care, slightly more than 20%, having a negative contribution to the top line of DOUGLAS. Makeup making a positive contribution in terms of sales share very comparable to skin care. Hair care still being small, depends very much on the country, but 2%, 3%, 4%, 5%, 6% of sales share depending on the geography, showing double-digit sales growth. And then accessories, which is basically flattish, let's say, compared to the top line.

So, the message is with both on a category level and on the brand level, there are very significant change -- sorry, deltas between the development of categories and brands. And clearly, we want to focus more on the winners or on those categories and brands where we see more growth potential going forward.

As Marco on the next page was already alluding to, we continue to believe in the proposition of omnichannel. We believe that in premium beauty, having brick-and-mortar stores, having 16,000 beauty advisers is a fantastic starting point to launch new brands, to familiarize customers with new innovations, with new smells, new products, et cetera.

But we also acknowledge that the E-Com channel is growing faster than the store channel. And therefore, we will continue to invest in the omnichannel elements of our strategy but we have decided to shift CapEx and OpEx investments more and more from the store part to the digital part and/or the omnichannel part. So, we launched three years ago as part of our Let it Bloom strategy, the objective to open 200 net new stores in the next three years. That is, by the way, coming to an end in December 2026.

We also said that we wanted to refurbish 400-plus of our existing stores. That objective also comes to an end by the end of 2026. And for the years ahead of us, we will still open new stores, but we expect a lower number of new store openings going forward. And we also expect that there will be in certain countries and certain locations an assessment where some of the like-for-like stores are continuing to contribute economic value to the company. And we also expect that on the E-Com side that our growth in the market and also of DOUGLAS will be ahead of the omnichannel growth which we are forecasting. So, we are making changes in the allocation of capital, in the allocation of people and the allocation of resources.

On the next page cross-channel services. Just to repeat for those of you who don't have that completely top of mind. Cross-channel services is Click & Collect. You go to our website, you order an article and you can click and collect it from our stores or from a pickup point.

Click & Collect Express, you go to our website, you select a store, you make an order in that store, and within two hours, you can pick up that product from the store. And then in-store orders, you are in a store in one of the 2,000 stores of DOUGLAS, you want to buy an article, which either is sold out or we only have it online and you can order it online in that store and you can either pick it up from the store or we can home deliver.

The combination of that, we call cross-channel services. We report that as part of our E-Com sales, but it's very much the result of having an omnichannel network. That part of our business is developing very, very well. And you can see that on the next page.

In 76% plus of all our customer journeys, the store is playing a role. In only 24% of all the customer journeys, that's a digital-only kind of customer journey. So this is just acknowledging the relevance of having an omnichannel, let's say, strategy in place.

And then you can see in the middle, the growth rates for the four services or the three services I was just referring to. So, Click & Collect up 7.7%. Click & Collect Express up 71.3%, heavily driven, by the way, by the rollout of this service across our store and, let's say, in-country network. So, there is a kind of a non-like-for-like component, but also on a like-for-like basis, Click & Collect Express is developing positively. In-store orders growing 5% plus and collectively 29.8% growth of cross-channel services.

So exclusive brands is an element of differentiation. Corporate brands is an element of differentiation. The Beauty Card is an element of differentiation. Offering omnichannel services is an element of differentiation. And all these individual building blocks are in isolation showing very good development. We still have to acknowledge that the aggregate result of that is not sufficiently visible yet in the total top line development of the company.

And by the way, on the right side, you can also see the value of an omnichannel customer. So, an omnichannel customer is on average spending EUR 321 annually with DOUGLAS omnichannel and has a purchase frequency of 4.8x. We were in the store domain, a loyal customer would maybe visit two or three times per year a store. That is considered to be a loyal customer in the premium beauty world. So, you can see what omnichannel is bringing in terms of frequency and, let's say, acceleration.

The last initiative I wanted to share with you is actually also, I would say, an official announcement because we have not yet publicly announced that. But in the back of our organization, we have been preparing the launch of the first DOUGLAS AI-enabled beauty adviser. So, we can proudly claim that we have 16,000 people in the stores who know everything about beauty. And once the customer is in the store, you can talk to one of our BAs, beauty experts.

But we also want to offer the equivalent of that in the online domain. And that's why we're very happy that we're going to launch publicly in Germany, let's say, this AI-enabled BA, which basically, as you can see on the right side -- or maybe you can't see it -- but you are typing in your question as if you're speaking to the BA and then you get an AI-enabled recommendation.

Firstly, that is a brand-independent advice what you do -- what you should do or what you shouldn't do. But when you go a little bit deeper, the AI-enabled beauty adviser can also make you certain recommendations in terms of brands. And clearly, there is a commercial steering process, let's say, behind us. So, we've been testing this first amongst our own employees and more recently in an A/B test environment in Germany, and we're now almost ready to roll that out starting in Germany in the weeks ahead of us.

So hopefully, this gives you some insight in a number of kind of the strategic initiatives, which we have been working on and are working on. And as I said, we're not sitting on our hands. We will continue to do more of that. And obviously, we will also communicate more of those initiatives in the months and the quarters ahead of us once we believe it is shareable and once we believe it's not sufficiently -- it's not really damaging our competitive proposition in the market.

To conclude, I would like to summarize by, first of all, we have been growing sales in a challenging market environment. We have been managing our costs very well. The combination of sales and gross profit pressure has led to a reduction of our adjusted EBITDA of roughly 5%. Secondly, we do believe that the slowdown in the beauty market has led to a new normal. And we actually do expect that this new normal will be there for the foreseeable future.

By the way, in the last quarterly call, we communicated to all of you that for the midterm that we were expecting a development of the premium beauty market in Continental Europe of somewhere between 3% and 4%. Based on the most recent development, also taking kind of the socioeconomic situation and the situation in the Gulf into account, we are now working more with a hypothesis that the premium beauty market will grow around 3% for the next three years rather than 3% to 4%. So, you could say that is also the lower end of the range, which we expected basically six months ago, which is a reflection of the, I would say, the situation in the world.

We are accelerating the execution of selected strategic initiatives, and we especially want to focus on those initiatives, which are differentiating us from the competition and which are helping us to drive our growth. We will continue to put emphasis on our omnichannel model, on cross-channel services, on a curated beauty assortment and the development of a stronger technological and supply chain backbone. We're constantly developing our omnichannel platform and customer journey to satisfy customer needs. And for instance, our AI beauty advisor is an important new, I would say, element in that desire.

And last but not least, for the third time, we are reconfirming the guidance, which we have communicated on the 30th of April. Our sales will be at the lower end of the range, as you can see on the right side, adjusted EBITDA of around 16% and the net leverage at the upper end of the range between 2.5x and 3.0x adjusted EBITDA.

With that, our presentation is coming to an end, and we now want to offer the opportunity for you for Q&A. Operator?

[Operator Instructions] The first question comes from the line of Jürgen Kolb from Kepler Cheuvreux.

Thanks very much indeed for this very comprehensive presentation and all the details on your future strategy. With this respect, two questions on the strategy.

One, how are you seeing in this context everything related to mergers and acquisitions? Obviously, we know that in the past, M&A has been a very solid foundation of the DOUGLAS strategy. Since the IPO, you've been concentrating on store openings and refurbishments. How do you see the M&A situation going forward? Is there a target that you could maybe -- or where you think this makes sense to maybe take a little bit of pressure out of the market from that perspective? First one.

Secondly, on the digital expansion, AI beauty advisor, of course, that's the next logical step. How about agent commerce? What's your strategy here? How far have you developed that? How visible are you and are your products and is DOUGLAS for all kinds of digital agents?

Thank you, Jürgen. Shall I take those two questions, Marco? So first of all, on M&A, you're correct -- first of all, Jürgen, you're correct that we have not done any M&A basically in the past three and a half years. You could say that coincides with my arrival as the CEO of the company.

And you're also correct that in the deeper past, we have done quite some M&A, but we also need to acknowledge that not all of that M&A has been successful. So, we had certainly in Spain, some, let's say, unfortunate decisions. And also, with the announcement in terms of goodwill impairment for both NOCIBÉ and Parfumdreams, that is also a reflection of the goodwill premium, which we have paid in the past. So, we have been very, how would you say, defensive in that sense.

We do not exclude M&A in the near term or in the midterm. And certainly in, let's say, in the store channel, we do see a number of smaller regional, let's say, predominantly store-focused premium beauty retailers who are either struggling or looking for a, let's say, a new parent. So, we have looked at kind of our 22 markets, and we also have made kind of a list about who would potentially be of interest for us.

So, it's not that we completely excluded. We also have prepared some homework. And also, there is kind of a very small list of targets which we would really be interested in. Clearly, I'm not going to disclose kind of the targets of that. So, I don't exclude that. That's the answer to the first question.

Secondly, in terms of digital expansion. So obviously, we see and we not only track what's happening in the digital domain and what's happening in terms of agentic commerce, but in the acceleration of our E-Com strategy and our digital strategy, we are paying attention to that. And we do believe that we are well positioned to benefit from this trend kind of going forward.

By the way, we're also proudly claiming that last week, we were selected in the DOUGLAS Italian E-Com website as the best premium beauty store of the Italian market. So, in that sense, we are already quite well positioned. But we do acknowledge that agentic commerce offers new opportunities. And if you're not prepared well enough, it will also provide, let's say, threats which we need to mitigate. So that is clearly part of our planning going forward as well.

The next question comes from the line of Yashraj Rajani from UBS.

I have two, please. So, the first one is on inventory levels across the market. So, I appreciate that everyone seems to be having a bit of a tough time given the consumer sentiment at this point but on the basis your conversations with some of your suppliers, how do you think about inventory levels across the market? And do you see that promotions continue to be potential pressure on your gross margin in the coming quarters? Or do you think that, that sort of slowly fades away? So that's the first question.

The second question is, Sander, you also spoke a lot about this new normal in the premium beauty market, and I appreciate you put midterm targets out there. But does this in any way sort of change your perception on when we get to a 2x net leverage? And in your mind, like what should be a reasonable timeline to get to the 2x leverage?

Okay. Yash, I'm happy, Marco to take both questions. So firstly, on inventory. We do record as of the end of March a year-on-year increase in inventory, it's around EUR 57 million, if I'm not mistaken. However, on the one hand, the business grew. And of course, we grew 1.1% in sales, but we grew even a bit more on the cost of goods sold.

In this sense, the margin slight dilution means basically more items sold for the same revenues. And this has led to the fact that actually the days of inventory outstanding are flat year-on-year, 126. It doesn't mean we're happy. We want to improve, and we are putting in place actions to improve, but it doesn't signal, let's say, on the KPIs, a significant worry, let's put it this way.

By the way, the EUR 50 million of increase in inventory year-on-year, we estimate around EUR 30 million to come from actually the stores network growth. And I think we are also in a situation where we are front-loading a lot of investments in the sense when you look at our lease liabilities in the last 12 months, inventory levels and even fixed costs hitting our P&L and profitability levels, many of these items refer to the peak into the new openings.

We opened 90 stores last year, which we do expect to, let's say, unfold to a benefit in the coming quarters and years. Why? Because the pace of openings is slowing down, and so you are going run rate with the openings and not, let's say, adding on top.

And secondly, we do operate with a fairly, let's say, dynamic and fast supply chain where we adjust our levels quite reactively. And therefore, it doesn't mean that if for the quarter, the sales were lower than expectation, we do suffer a little, let's say, higher stock levels at the end of the quarter, but it doesn't mean that there's a clearance need, let's say, because then we adjust our purchases with our technological-driven systems in the coming weeks and months.

On the new normal and implications for our midterm, our midterm guidance that we issued last year pointed to a low to mid-single-digit top line growth with a stable profitability pointing to a deleveraging path targeting a range of 2x to 2.5x. So first of all, 2.0x, maybe in your question is a bit on the low end of this range, whereas 2.5x is also, let's say, a more reasonable, I would say, expectation and target given the recent developments for the midterm, which still sits within our midterm guidance and our intention to become a dividend-paying company. Of course, once leverage is brought down a little more and cash flows, of course, improve consequently.

And again, on profitability-wise, as mentioned, due to the many investments that we've done, we always intended 2026 to be a stabilization year on the side of the promotional pressure as well as the unfolding of the investment benefit and therefore generating upside in the years to come.

We now have a question from the line of Adam Cochrane from Deutsche Bank.

A couple of questions, please. First of all, can you just remind us what the customers benefit from the Beauty Card is? And maybe does that really work across both in-store and online to help maintain those and grow those customers?

Secondly, if online is the sort of growing category more so than stores, why is the Parfumdreams sales so weak in the period? Why if online is growing, has that not been stronger and more participating in the growth of that part of the category? And then staying on online, within the sort of core business, can you remind us of the relative profitability of online compared to store within the mix? And as you grow more sales online, assuming some degree of substitution, what does that mean for the outlook for EBITDA margins?

So let me take the first two questions, Marco, and then you take the 3A and 3B.

So, first of all, Adam, the Beauty Card, the key benefits of them are, first of all, the more you spend, the more beauty points you collect the beauty point is basically a currency which you can use in the near future. So that is, you could say, saving -- it's a savings program. That's one.

But secondly, with everything you buy by using the Beauty Card, we get personal information about the customer. And therefore, we can make our proposition towards that customer more targeted in terms of assortment, in terms of branding, in terms of pricing, in terms of communication. So, personalization is the benefit for both the customer and also for us.

And with that personalization with the data which we collect behind that, we can commercialize that, let's say, in our discussions with the brands because the brands would love to know who is buying in Yves Saint Laurent, in Germany or in France or whatever, but they don't know the customers on a name basis. We know the name address and the e-mail address. So, we can target basically those customers on behalf of the brands with a DOUGLAS specific proposition. So that is the answer regarding the Beauty Card.

Secondly, within online Parfumdreams, by the way, we have two brands in there, that's Parfumdreams and Niche Beauty. I don't think we've disclosed the size of, let's say, of those individual brands. But Parfumdreams is in terms of sales, significantly bigger, a number of times bigger than Niche Beauty. Parfumdreams is active in 15 countries in Europe, if I say it correctly. Niche Beauty is active in more than 100 countries, let's say, in Europe.

But for both brands, the DACH market -- sorry, 100 countries is not in Europe that goes beyond Europe. But for both brands, the DACH region is still a very significant portion. And by the way, Niche Beauty is developing top line-wise significantly better than PD. So, we feel more of the sales pressure on PD. And to make it very simple, that is ultimately mostly related to pricing and promotions. So, PD is a price player. And at a certain point, it is about who is the cheapest.

We also have kind of a minimum margin or a minimum price we want to achieve. And below that, we don't go any deeper. And clearly, at this point in time, we've not found kind of the sweet spot of that. So that is the simple explanation for PD.

With that, handing over to Marco.

Yes. So, on profitability of our E-Com core, and when I say core, I am, for example, excluding in my mind, the retail media business that's, of course, significantly accretive to the business in general but specifically in E-Com where we reported.

So, E-Com core -- E-Com in general, of course, follows a slightly different, let's say, P&L structure because you would have a slightly lower gross profit margin, at the same time, different cost structure. You don't have the fixed costs of the stores such as personnel. You do have a bit higher logistic and marketing costs and you land at an EBITDA margin, which when you just compare the channels is higher in the stores and lower in E-Com.

However, because nowadays, a lot of, let's say, store costs are now D&A, namely the depreciation of the right of use, the old rent. And of course, in principle, also the capital allocated to the stores to maintain them and open them and refurbish them is bigger. When you go down to the EBIT percentage profitability, the two channels for us are actually fairly aligned.

And therefore, it might mean that a significant, let's say, expansion in E-Com might have, let's say, might limit the growth of EBITDA margin. But then at EBITDA, the expansion of the margin would follow a balanced view. Yes. And also, I think I'm addressing both the 3A and 3B with this also looking forward.

We now have a question from the line of Nick Baker from BNP Paribas.

Two from me. You spoke about new sort of pure-play online competition in Europe and alluded to Amazon. So how much of a new threat is this? And how much of a paradigm shift does this represent?

And then second question is, can you give us more details about the very exciting AI beauty adviser that you're rolling out? How interactive is this going to be? Can users, for instance, take those photographs themselves and apply beauty filters, et cetera? So, a bit more color on that would be amazing.

Nick, can you clarify your first question a bit because I did not -- I understood you have a question on Amazon and a paradigm shift. But can you clarify a bit more to make sure that I have the right interpretation?

Sure, certainly. My question was about whether Amazon is a new which I believe you were alluding to, is a new threat and how much of a paradigm shift does it represent for the European market and the competition within it. So, whether this sort of takes us to a new kind of level of competition within Europe?

Okay. So, okay, that's clear. So, first of all, it is not new for us that Amazon is starting to sell selective beauty. That's also not new in this quarter that already is happening for a number of years.

Just to remind you that in the United States, Amazon is a significant retailer, a pure-play retailer, and they have already started to focus on selective beauty a number of years ago. And in Europe, we didn't really see a strategic focus from them until, let's say, two years ago.

Today, you can basically buy every beauty brand, you can buy that on Amazon, but that is not different today versus a few years ago because that is largely driven, let's say, by the gray market and by the marketplace from Amazon. But what is more recent is that we see that some of the premium beauty brands are starting to authorize Amazon and basically are starting to ship beauty brands from this brand to Amazon.

That is a more recent development in Europe. That has already happened to other pure players as well, and let me not repeat the names of our, let's say, key competitors. We now see that Amazon is doing that. And clearly, we keep a close eye on that.

By the way, there is not one Amazon in Europe. Amazon is active in most of our larger markets but it's not so big and significant in most of our smaller markets. But especially in Germany, in France and in Italy, where they are a sizable retailer where they were already sizable in selective beauty before this year, we keep an extra eye on that.

So that is the situation for now. And we are not happy with it, but we also do believe that our strategy omnichannel offering services, creating more exclusivity, omnichannel services, retail media are all weapons in basically our competitive battle against the pure players.

Then your second question was if the launch of the AI tool, which we're going to -- sorry, the AI-enabled BA, which we launched in June, if that also provides opportunities for making pictures and visuals. At this point in time, as far as I'm aware of that will not yet be the case in the first version, also looking to you, Marco, but I'm not aware of that. I do know that we're looking at that, but it will not be part of basically the version, which we will launch in Germany in a few weeks from now.

[Operator Instructions] The next question comes from the line of Vandita Sood from Citi.

I've got a few questions. I'll just give them out. So first of all, thank you for sharing the details on the strategy and exclusive and corporate brands. I guess I just want to understand it's 15% today, where could this get to? Is there a ceiling? And what does it take to convince brands to sign on with you exclusively? So, do you need a better supply chain? Do all your stores need to be fully refurbished? Like, what is it that you need to work on to get this number higher?

The next question is a bit more guidance related. So, the guidance for the second half implies a 20 basis points decline in the second half. The 2Q evolution and just the gross margin was 70 bps. So just what's making you confident?

Vandita, can we interrupt you for a minute? Somehow your line is very bad. So, we understood the first question about corporate brands and exclusive brands. But I don't think we could understand or hear the second question, which I think is about the second half of the year, but then we missed it.

Okay. Is this any better?

Slightly better.

Sorry. Yeah, exactly. So, the first question was about what the levers are to get the share of exclusive brands higher. And then the second question is just the guidance is, as you say, 20 bps decline in the second half, but what gives you the confidence that it will be lower than that given the margin -- gross margin evolution itself was 70 bps in the second quarter?

And then, just also want to understand how refurbishments impact the like-for-like reporting. So, if a store has been closed for a short time and when it reopens, does that come under like-for-like or not? And then the last one, just really small is there was about EUR 8 million of adjusting items to EBITDA. Just I think EUR 5 million was the strategic programs. Just what do these relate to? And what should we expect for the full year?

Shall I take -- Okay, we understood it. Thank you, Vandita, for those four questions. Shall I take the first one, Marco, and you take number two, three and four?

So, your first question was about corporate brands and exclusive brands, which is today collectively roughly 15% of our sales. And by the way, in that domain, corporate brands is roughly flat at this point in time because our exclusive brands are growing, let's say, in the second quarter.

When we talk about exclusive brands, we are making a distinction between so-called group exclusive brands, which are brands which we are launching basically across all our markets and clusters specific brands, which are exclusive brands, which we have exclusive in a smaller part of our kind of geographic domain.

Our core focus is sitting on group exclusive brands, and we're taking a much more proactive approach to start approaching or talking to younger brands, starter brands, scale-up brands in an earlier phase. So, we have established a group exclusive brands team basically year and a half years ago under the leadership of our Chief Assortment and Purchasing Officer, Stephanie, who is, by the way, as we speak in the United States, talking to some new exclusive brands for the near future. So, we're offering those exclusive brands an entry into Europe, and entry into the market-leading premium beauty retailer in Europe, and entry into 22 online stores and potentially up to 2,000 brick-and-mortar stores.

In most cases, we are signing agreements with these brands, which are often multiple-year agreements where we agree on the level of exclusivity and also the level of support and the level of commitment, which we will get and which we will expect also from the brands. And we are actively working on a pipeline of initiatives and launches. So, we have a pipeline, let's say, available, which will lead to more exclusive brand launches in the rest of this year and also in the next two years. And we want to continue to grow and develop our like-for-like exclusive brand portfolio.

With all of that, we do believe that we will be able to significantly grow this 15% to a higher percentage. We've also formulated an internal objective by year, basically for the next three years. But we are not disclosing, let's say, that objective for, let's say, competitive reasons. But I can assure you that the trend which we have seen more recently in exclusive brands is a trend which we would also expect basically for the years to come.

With that, I'm handing over to Marco on the three questions.

Vandita, so firstly, on the second half, implications for the margin. I think it's fair to say that when you plot our quarterly margin evolution, we have been declining in EBITDA margin year-on-year for quite a few quarters, although showing signs of improvement because starting from last year, for example, more than 100 bps down to 80, and so on.

And importantly, I think what we see on the cost management in the last quarter is also quite, I believe, reassuring as to the possibility to safeguard the cost to revenue ratio because in the last quarter, we lost only 10 bps, let's say, on SG&A basis despite arguably lower than, let's say, than wished top line growth and also taking into account, again, the store expansion that last year happened and back loaded.

So, the second half of last year started to be more loaded with opening costs. And therefore, we expect to compare against a, let's say, more comparable, let's say, cost base from a simple point of view of the store perimeter basis.

We do think that certain gross profit margin pressure will remain, although it continues to annualize against already, let's say, existing pressure, and therefore, the assumption to be able to partially counterbalance it with cost saving initiatives that we're implementing, by the way, in various elements.

To give you an example, we are making use of AI-generated marketing assets to reduce our production costs and more efficiency on the net marketing expenses, or we are doing other, let's say, lighthouse investments into AI, for example, to become more efficient as an example, in customer service and so on.

And your third question on refurbishments is in like-for-like. So, our definition of like-for-like excludes, of course, new openings until they annualize after 12 months and also excludes refurbishment or relocations. If they have been closed for refurbishment for more than two weeks, or they went under a space change of more than 20%.

That means for 12 months, this store is also out. It also means that the like-for-like definition is very strict, call it this way, because if we were to look at the same-store perimeter growth, so let's say, including the refurbishments, but still excluding the new openings, then our like-for-like would improve by roughly 100 basis points. And basically, as we've done many refurbishments, that's something that we need to catch up on in the coming quarters.

And then finally, on your questions on the adjustments, you can find in the presentation in the backup some more details. But basically, in the last quarter, which is also driving the first half of the year, we've had a few items, including when we call strategic initiatives, you can be essentially of implementation, so warehouse implementations.

It can be related to the necessary IT investments to create interfaces to link the warehouse or the actual cost to set it up, or potentially double running costs when we have temporarily the ramp-up of the new warehouse, and let's say, in the meantime, that the old one is still operating. So, we keep in EBITDA, let me say, simplistically, only one running warehouse, and the unused one is sort of adjusted.

We also booked around EUR 2 million of all costs related to past acquisitions that resulted from a, let's say, tax consequence on VAT from 2017. That's a very, very one-off item, but unlike strategic initiatives is really just popped up this quarter. And then for the full year, last year, we had roughly EUR 12 million of total adjustments for the full year. I would expect this financial year to be on a similar level.

In the year to go, we are expecting not only some cost adjustments, but also some actual revenue adjustments because we have sold a couple of non-core real estate assets in the Netherlands, which is clearly -- despite an income, it's also a non-recurring income, and therefore, we will adjust these costs, which you will see in the next quarter reporting.

The revenue?

Yes. The income.

Yeah. Yeah.

The gain.

Yeah, not the cost. There's a gain. Yeah.

In this case it will be a small gain, let's say. We'll come back to it when we finalize it.

We now have a question from the line of Joffrey Bellicha Meller from Bank of America Securities.

The first question I have is on Southern Europe. And I just want to understand a little bit what are the competitive dynamics you are seeing there that led to the sales decline in that region? And more importantly, the EBITDA margin decline was a bit wider than the rest of the group. So, is there anything specific that is going on in those markets that we should be aware of and that you would flag?

And then the second question is regarding your exclusive and corporate brands. Obviously, you're making a very strong push and very logical push in that direction. I just wanted to understand a little bit better if you could discuss the difference in gross margin that you are seeing in exclusive and corporate brands compared to the rest of the portfolio, to the extent that you can share that information?

I will do that. Okay. So, Joffrey, I'll take the first question, and then Sander takes the exclusive brands question.

So Southern Europe, you're right. It showed a bit of a slowdown in the growth rate. Of course, Italy is our largest market there, followed by Spain and then to a smaller extent, the Adriatic and Portugal.

There, last year, we did suffer slightly in the summer, you may recall from previous calls, some supply chain complications because we changed warehouse over the summer, and that led to some, let's say, hiccups in the initial phases of the go-live of the change of operator which has created some weakness in the performance in the second half of calendar year 2025, just to put a little more into perspective. The situation is now much more under control in the sense that the performance is now back into the expected standards, and so that's not a problem anymore.

We do witness a strong competition not only from pure players online and Sander already quoted Amazon as a very sizable competitor in premium beauty, also in Italy, but also from other brick-and-mortar retailers, both in Italy and Spain, that tend to operate with a slightly more aggressive approach compared to, let's say, not only us, but also the let's more established omnichannel retailers.

And so, in this sense, there is a part of competition that plays a role. And there's also at an EBITDA level, there's also a mix effect between the channels, as I was mentioning earlier, at EBITDA, E-Com carries a slightly lower EBITDA margin than equalized EBIT.

And in the last few months, actually, E-Com has outgrown quite a few stores in Italy, for example, and so you have a slight dilution effect coming in there as well. But what works quite well in Southern Europe is our cost management. And so that partially counterbalances, let's say, the pressure on the margins. And yes, this is a little bit the situation that I can comment about.

Okay. Thank you, Marco. So, Joffrey, on corporate brands and exclusive brands, without disclosing the specific numbers, I can give you some indication. So, both corporate brands and exclusive brands are accretive to our gross profit development and EBITDA. Corporate Brands logically is sitting significantly above, let's say, the 45% gross profit, which we make as a company. But also, our group's exclusive brands portfolio is also sitting above the 45%. So every extra euro that we make in those two domains is helping our gross profit.

And in addition to that, the volatility of gross profit development is significantly less because there is significantly less pricing and promo activity with those brands, because we are not really competing on those specific brands with our competitors. So, let's say, the stability of the gross profit is also better.

And obviously, if we are going to accelerate the growth of corporate brands and exclusive brands, it will make us more unique, i.e., differentiated versus the competition, but it will also protect, let's say, gross margin erosion for, let's say, to a bigger extent as what we have been currently experiencing.

Is that answering your question, Joffrey, for now?

Yes. Thank you both for the answers on both questions. Just a quick follow-up, if I can. In regard to the last commentary you made on the gross margin, I also wanted to ask you, considering the discounting you're seeing at the moment, how should we -- do you have a view on the risk of discounting in your fiscal year '27?

Well. First of all, we have given guidance for this year, and we've adjusted our guidance just two weeks ago. We're not guiding way on gross profit. We're guiding on top-line leverage and on EBITDA.

We've explained that there is a structural pressure on the gross profit, not only at DOUGLAS, but also in our markets. We do not expect that the competitive landscape is going to change. But that doesn't mean that our gross profit will continue to go down. We are not talking today about specific numbers for next year.

But we are trying to give you a feel that we're working on a number of building blocks in our strategy, which are basically creating a counter pressure for that. Retail media, the partner program, corporate brands, and exclusive brands are all elements that are actually enhancing our gross profit development for the future.

And we also need that because at the same point in time, we do see that the E-Com domain creates pressure on those brands, which are more widely, let's say, available in our markets. But we are not in a position today to give you a quantitative indication about gross profit for the next financial year.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Sander van der Laan for any closing remarks.

So, thank you very much, operator. Thank you all for attending our quarterly call. We do -- obviously, we all feel that the market environment and the performance of DOUGLAS require changes and adaptations in the near and the midterm.

We wanted to give you an update on what has happened year-to-date. We also wanted to give you an indication that we're not sitting on our hands, but that we are reacting by accelerating certain elements of our strategy. And we fundamentally believe that we are well-positioned for the near, the mid, and the long term, and we will get back to you with the next quarterly update in August. Thank you very much and have a great day.

Ladies and gentlemen, welcome to the Douglas Group Q1 2025-'26 Earnings Results Conference Call. I am Maria, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sander van der Laan, CEO. Please go ahead.

Thank you very much, operator, and good morning to all of you at our, let's say, quarterly Q1 results release. As you know, we have released a trading statement just a few weeks ago where we talked about our sales growth in the first quarter, and we also gave you our preliminary let's say, EBITDA number for that quarter. And basically, today, we are reconfirming those numbers, and we're also providing more numbers and background and context.

And clearly, I will not do that alone. So I will do that with the support of Marco, our CFO. So the agenda for today is I will give a brief introduction. Subsequently, I will hand over to Marco. He will give an update on the Q1 financials. I will come back then with a strategy and business highlights section, and then we will have an opportunity to first wrap up and then to move into Q&A.

So the Douglas Group is -- continues to be a well-positioned beauty company. We are the leading omnichannel Premium Beauty retailer in Europe. We have 4 retail brands, 2 omnichannel brands, Douglas and NOCIBE and 2 pure-play brands, Parfumdreams and Niche Beauty in our portfolio. We currently operate in 22 omnichannel countries. So we do deliver to more countries with our pure-play business, but our omnichannel business for now is focusing on 22 countries.

And for this year, we also have no plans to move to the 23rd country. We had, by the end of December, 61 million plus Beauty Card members. So we have the largest, let's say, CRM program in Premium Beauty of Europe. We reported EUR 4.6 billion of sales for the annual -- the year '24-'25. And we are doing that with almost 2,000 -- actually, we have 1,970 brick-and-mortar stores plus 22 omnichannel e-commerce stores in the omnichannel market.

So we basically have 2,000 stores at this point in time. That is basically, I would say, the elevated pitch for the Douglas Group. If we specifically zoom in on the first quarter from the 1st of October till the 31st of December, what we see is that our E-Com business did well and has a, I would say, a healthy sales momentum with 4.2% sales growth. That includes our so-called cross-channel services, and Marco will give you a bit more perspective on the size and the development and the relevance of our cross-channel services.

So 4.2% growth in the E-Com channel. What we do see is that clearly, customers are quite uncertain about, let's say, the outlook of the world, the outlook of the wallet and also the outlook of, I would say, of society. So that leads to, I would say, more uncertainty and also more volatility between quarters, between months, between countries and between channels. So we see more swings, I would say, within our business versus what we have seen before.

But by the end of the day, it adds up to a sales growth number for the Group of 1.7% in Q1, which basically means that we did almost EUR 1.7 billion of net sales, 0.4% growth in the stores, which is a combination of like-for-like, in this case, a negative like-for-like, although we need to give a certain nuance and Marco will come back on that. And clearly, our new stores and also our refurbished stores are bringing incremental sales.

We delivered EUR 333.7 million of EBITDA. That's an EBITDA margin of 19.9%. Clearly, this is the biggest quarter in terms of sales and certainly in terms of EBITDA. Albeit our EBITDA margin rate and also EBITDA euros was below last year, and we also will explain that. We delivered EUR 144.8 million of net income, and we ended the quarter with a net leverage of 2.6x. However, that is a combination of leases and financial debt.

And purely on the financial debt, our leverage is actually 1.4x. The financial debt actually came down. Talking about the market environment. So the Premium Beauty market in which we operate is currently growing, albeit at a lower pace. So post-COVID, there was a significant acceleration of the market. And in the past kind of 1.5 years, we see a significant slowdown of the market growth across Europe.

Especially in Germany and France, which is our #1, Germany and #2 France market, we see a more significant slowdown. And basically, you could say that in Germany and France, the markets are flat, flattish. I will show a bit more details on that on the next page. The Netherlands has been really tough, has been in decline in the past quarter. And the rest of Europe has basically slowed down.

But in CEE and SE, Central Eastern Europe and in Southern Europe, we still see growth, albeit lower growth versus the prior years. We also see that customers are cutting back on certain expenses or they're waiting for the promo. They're waiting for basically for a better deal, and that has an impact on our gross profit.

So if you would ask us, are we promoting more, then I would say, no, it's not that we are putting more promos, let's say, in the basket. But what we do see is that customers are looking more for promos. They wait for the promo deal, and that has an impact on, let's say, certainly on our margin and sales development.

So overall, I would say we have a mixed sales development during the quarter, characterized by more volatility between periods and also between countries. If you look to our operating territory on the next page, we currently operate in 22 countries. And basically, for 8 -- 9 of those countries, we do have external market data, but we are working with 3 different providers. So we work with Circana for basically Germany, France, Spain and Italy.

We work with Nielsen for the Netherlands because there is no Circana for the Netherlands. And we work with Vector for Poland, Czech Slovakia and Romania. The market definitions for those 3 agencies are not the same. So be aware that not -- it's not always the same, but it does give kind of a clear indication of what happens.

And when you look to the individual markets, you can see a pretty wide, I would say, spread of performance. So our #1, Germany and #2 market, France are showing -- are in this quarter showing a slight growth, 0.8% and France basically being flat, which is a slight improvement versus the quarters before.

France was in decline, the market before this quarter, and Germany was real flat before the quarter. So you could say it's now plus 0. Italy, Spain, still showing healthy growth, slowdown versus the quarters before, but not too bad. The Netherlands is a very big, I would say, negative outlier.

Not so long ago, the Netherlands did almost double-digit growth in terms of market and also we did very well. But now the Netherlands is particularly negative in this quarter. More recently, in this quarter, we see a slight improvement, but still negative. And then you see the CEE markets, which all show, I would say, healthy growth.

And although these numbers are less versus what we've seen in the years before, still healthy growth on the back of, I would say, growing wealth and also on growth of the Premium Beauty market. And within that market, we are doing relatively well. When you combine those 9 markets and you also put weight them, then basically in those 9 markets, the average growth of 1.85%.

We report for the quarter 1.7%, but the 1.7% includes 22 countries. The 1.85% includes 9 countries. So we believe that we can say that our basically market performance -- relative market performance has been stable across Europe, and we've neither lost nor gained on average share. In our biggest market in Germany, we actually have gained a little bit of share, and you've seen that the market is also slightly, let's say, positive.

So this gives you a bit more context on the market. We believe that going forward, that the Premium Beauty market in Continental Europe, so I don't talk about the Nordics, I don't talk about, let's say, the U.K. because we don't operate there. But we would expect that the market will do around 3% growth in the 2, 3 years ahead of us.

Around 3%, could be a little bit more, could be a little bit less. The most important question for us is what is going to happen in France and Germany because that is 50% plus of our sales. So that is kind of the market situation and the market expectation going forward.

Marco?

Yes. Thank you. Thank you very much, Sander, and welcome, everyone, also from my side. As Sander just mentioned, we delivered a solid performance in a challenging market and economic environment this quarter. Our sales increased by 1.7% to EUR 1.67 billion, and our adjusted EBITDA decreased by 5.6% to EUR 334 million, representing a 19.9% adjusted EBITDA margin.

Our sales development was uneven in the period with a solid performance in November and its key events, Singles' Day and Black Friday, however, generating a partial pull-forward effect of sales that we normally see in the Christmas business. This also had an impact on the mix of the products sold in the quarter with a greater share of items sold on promotions and as Sander was mentioning, and for example, during our Black Friday or Cyber Monday and a lower share of products sold at full price, therefore, impacting the gross margins.

Additionally, as the store openings completed in the last year are still in a ramp-up phase, we see temporarily a slight margin dilution effect that should disappear once the stores reach their run rate potential. Overall, the still challenging consumer environment drove heightened price sensitivity, which led to a decrease in gross profit margins by 120 basis points compared to a year ago, which is the main reason for the adjusted EBITDA margin reduction year-on-year.

My next slide is about our store and E-Com sales trend. In the first quarter of the new financial year, we witnessed again a robust growth of our E-Com sales at plus 4.2%, outpacing the stores that, however, grew plus 0.4%. As a result, now E-Com sales account for 33.9% of the Group, up 80 basis points in share from a year ago.

Total sales growth was driven by price, low to mid-single-digit positive, while like-for-like volumes were negative, partially compensated by store space growth. In fact, our store channel sales were driven by openings and refurbishments, while on a like-for-like basis, sales decreased by 2.8% versus prior year.

As always, please bear in mind that in our definition of like-for-like, the majority of refurbishments are excluded as the store remain closed for works for more than 2 weeks. And if we include refurbishments and relocation in the concept of same-store growth, the reported like-for-like number would be 0.5% higher.

Furthermore, in our last call, we spoke about the growth of our omnichannel services being Click & Collect, Click & Collect Express and In-store orders, providing a seamless customer experience across our channels. In Q1, they grew 17.6% versus last year to EUR 79 million, representing approximately 4.7% of our total sales. These services continue to be a differentiating factor from our online competitors and nurture our most profitable customer base, which is the omnichannel one, delivering significantly higher frequency of purchase and annual spend.

And again, the allocation of these services is within the E-Com channel. And if they were allocated to the store channel, this would improve by 1 percentage point the like-for-like of the stores.

Furthermore, our Douglas app has performed very strongly in Q1 with more than 1/3 of our E-Com orders done via the app, and this contributes positively to our customer loyalty, but also value as the conversion rate with the app is significantly higher than with the web shop and generally, performance marketing costs are lower, ultimately generating higher value per order.

Let's now go to the next slide on our segment developments. Our 4 largest segments again achieved positive sales growth in the period with the highest growth rate once again in Central and Eastern Europe. By the way, you might have noticed that we changed the segment order with CEE now being reported before SE as it has now become our third largest segment.

This is also a positive contributor in our total EBITDA margins as CEE, we report the highest relative profitability. And therefore, the more CEE grows, of course, the better our blended average remains. In DACHNL, sales growth was driven by E-Com with plus 2.6%, whereas store sales declined a bit below the 1%, driven by lower traffic. France delivered a resilient 1.2% growth, driven entirely by 7% -- 7.1% higher E-Com sales.

And in CEE, store sales rose by 5.4%, benefiting from 31 net store openings over the last 12 months. But also E-Com sales for the segment were up by 13.6%, again, with a very strong performance. In Southern Europe, sales increased by 0.6%, thanks to 4.5% E-Com sales growth, whereas store sales were flat versus prior year. And lastly, sales at Parfumdreams, Niche Beauty ended up 1% below last year.

Moving now to the adjusted EBITDA margins on the right. Margins declined across all segments, and this is mainly due to the early mentioned decline in gross profit margins. The 200 basis points decline in DACHNL region is also for 50 basis points attributable to a sub-based income reclassification to the corporate headquarters segment, and this year-on-year comparability gap will be neutralized by the next quarter when finally the reporting will be comparable.

PD/NB shows a relevant margin decline, mainly due to the competitive pressure of online pure players and the phasing effect of marketing income and other items impacting positively the first quarter of prior year. Now as we've been focusing on the margin evolution year-on-year, I would like to talk about gross profit buildup and operating expenses detail.

A consumer trading environment with a focus on pricing and promotions led to 120 basis points lower gross profit margin. We have prepared this slide to help you understand how the different drivers impacted our gross profit and gross profit margin in the quarter. We did achieve sales volume growth in the quarter, which you find back as a positive volume impact on our gross profit development, so the first bar of the waterfall on the left.

Supply contributions were also in line with previous year in the quarter in the third bar of the waterfall on the right, although leading to a minor dilution of 10 basis points as a ratio to net sales. And then as you can see in the middle bar, that indicates that all the gross profit margin decline comes from the cash margin mainly from increasing promotional pressure in most of the countries, resulting in over 100 basis points of margin dilution.

This, [indiscernible] for a small rounding difference leads to the 120 basis points margin decline versus prior year. Moving on to the next slide on the net operating expenses. Our net operating expenses went up by 3% to EUR 378 million compared to the same quarter a year ago. Cost control measures to safeguard profitability were offset by a temporary margin dilution related to the ramp-up of effects of new store performance, as we commented earlier.

Staff costs increased by around 3% to EUR 203 million, and the cost-to-revenue ratio was only slightly higher, again, essentially due to the ramp-up of the openings, whereas on a like-for-like basis, this remains flat. Our other net operating expenses were also up by around 3% and inside different dynamics with net marketing expense ratio lower, thanks to higher marketing income and stable expenses, confirming our overall investment versus prior year.

Property expenses were slightly higher year-on-year on the back of our store network growth, whereas again, on a like-for-like basis, property costs were in line with previous year as a percentage of sales. Let's now go to the next slide with our P&L. And I already walked you through our sales, gross profit and operating expenses development.

Adjustments were again lower than last year in Q1, though I remind you, we expect the full year amount of adjustments to remain broadly in line with previous year. These all resulted in the adjusted EBITDA of EUR 334 million, minus 5.6% versus last year, with a corresponding decrease in the adjusted EBITDA margin.

A small rounding difference bridges the margin delta between 21.5% and 19.9%, so it's around 150 basis points. The D&A charges were up 8.6% as a result of higher depreciation related to rights of use of our growing store network and new logistics facilities, but also because of the investments that we've done in the last couple of years in the existing stores and warehouse fixed assets and IT.

Asset impairments included in this line item were up by just over EUR 1 million to EUR 1.4 million. And for the sake of completeness, we are also now starting to show the adjusted EBIT view and the difference between the adjusted and the reported EBIT includes besides the EBITDA adjustments, also assets impairment as detailed in the appendix for your information.

The financial result improved further, thanks to a combination of a lower net financial debt and lower average interest spreads on our financial debt following the repayment of the bridge facility in March last year. Within the reported EUR 29.3 million, EUR 15.9 million is related to IFRS 16 lease liabilities, financial expenses compared to EUR 14.4 million last year.

By difference, the interest paid on net financial debt amounted to EUR 13.5 million compared to approximately EUR 20 million last year, confirming the positive effect of net financial debt reduction. The effective tax rate of 29.4% is our current estimate for the full year, which we apply across the quarters as long as this remains our best estimate.

And lastly, we reported a net income of EUR 145 million, which equals to an earnings per share in the quarter of EUR 1.35. Let's now go to the next slide about the net working capital and CapEx. Our average LTM net working capital decreased by EUR 77 million to EUR 168 million, which is 3.6% of our LTM months group sales.

The improvement comes mainly on the back of our supply chain financing initiatives, whose average benefit amounted to EUR 109 million, while 1 year ago, this was not yet in place. You can find the exact amounts in the appendix of this presentation for your info on the supply chain financing usage.

If we exclude the benefit of supply chain financing, we experienced a year-on-year increase in average net working capital, mainly due to higher inventory levels as a result of the store openings. However, days of inventory outstanding remained broadly in line with last year at 122 days.

In order to improve our inventory management, we are implementing several actions, including a new AI-driven system to calculate the stock distribution needs between stores based on real-time demand, rebalancing the inventory to optimize capital efficiency. This system is being tested in Germany for a potential future rollout across the Group. Moving to CapEx.

In the quarter, we opened a total of 15 stores and closed 2, thereby lifting the total store count, including 129 franchisees to 1,972 stores. Including store refurbishments and other investments, this resulted in a EUR 6 million higher CapEx compared to a year ago. However, we confirm that we are pointing to a lower full year CapEx level as we guided already.

Therefore, in Q1, we're witnessing a different phasing effect compared to last year. Let's go now to the next slide about the free cash flow. Our free cash flow after property rents amounted to EUR 383 million. When you compare the year-on-year figures, you can see that the main deviation of free cash flow comes from the delta in adjusted EBITDA with the other components remaining broadly in line as a whole.

Q1 is clearly the strong cash flow quarter with significantly positive contributions from working capital with the sale of goods that are in part paid to suppliers in Q2 and other positive provision movements, for example, VAT payments following the subsequent month of the sales. The next slide is about our net debt structure. And on this slide, you can see a snapshot of our sound financial structure at the end of December 2025.

In the chart on the left, you can see the net debt structure, showing a significant reduction of the net financial debt from EUR 789 million to EUR 609 million. The net financial debt reduction was entirely offset by an increase in lease liability by around EUR 200 million versus prior year. And this increase, as we had commented in the September Q4 call, is mainly due to the opening of the OWAC warehouses and 67 new store openings in the last 12 months as well as contract renewal for existing stores.

And this creates, of course, a front-loading effect with lease liabilities placed on the balance sheet at the very beginning of the contract and not yet, let's say, having the EBITDA delivery of the store at the denominator. On the right-hand side of the slide, you see the development of the net leverage ratio.

And again, including the higher debt related to lease liabilities, the ratio went up from 2.3x to 2.6x, also, of course, as a result of the lower adjusted EBITDA as denominator. However, if we calculate the net leverage on a pre-IFRS 16 basis, then we see a small improvement from 1.5x to 1.4x. And this reflects our lower net debt -- net financial debt for the reasons I described earlier.

I will now turn to my last slide with our full year outlook. You will notice that the full year guidance remains unchanged compared to what we saw in the Q4 call. We still expect sales between EUR 4.65 billion and EUR 4.80 billion and an adjusted EBITDA margin of approximately 16.5% and net leverage between 2.5x and 3x as of 30 September 2026.

It's worth reminding that as previously commented, Q1 of last year was our strongest quarter and the year-to-go period now measures against softer sales and margin performance from previous year. So whilst consumer confidence remains volatile, we are confident on the strength and proposition of our positioning, and we're working hard to deliver within the ranges of our guidance.

This concludes my section of today's presentation. Thanks for your attention. I will now hand the call back over to you, Sander.

Okay. Thank you, Marco, very much. So in the next section, I want to provide some color with relation to our strategy and certain highlights of the quarter. So first of all, on this page, you are seeing that we continue to develop our exclusive brands portfolio. So exclusive brands are really important for us from a strategic perspective because those brands you can exclusively buy at Douglas.

The competition doesn't provide them. Hence, there is also no price comparison, no margin pressure. Therefore, we strategically want to grow our, let's say, share of exclusive brands. And under the leadership of our A&P lead, Stefanie and the Exclusive Brands team, we continue to grow and develop this portfolio of exclusive brands. This quarter, we are going to launch a new makeup brand about-face, which is basically with a celebrity behind the brand called Halsey.

And we're going to launch a new perfume, let's say, fragrance brand, Orebella. And with both brands, we are exclusive and unique. So we will launch them this quarter, and we're going to develop and grow those brands in the quarters and the years ahead of us. So one important lever of our strategy. Second important lever is to expand and develop our store network in the existing 22 countries.

So like Marco said, we opened net 13 stores in Q1, including store # 117 in Poland. We refurbished 22 stores, but this includes also relocations. Hence, this number is slightly deviating from the number which Marco mentioned earlier. We are not planning to open new countries this year. But as we have communicated a few months ago, we are currently working on a potential entry into the Middle East, the GCC countries.

So basically Saudi Arabia, the Emirates, Bahrain, Kuwait and Oman, but there is nothing further to report on this for today. Like Marco also said, in Q1, there are basically 3 important, let's say, sales events, Singles Day, Black Friday and Christmas. And especially Black Friday was a very successful event, and you see some, let's say, key numbers in terms of volume and traffic and let's say, and results in the numbers on the right.

But as Marco also was saying, we also have the feeling that customers are waiting a bit more for those events to buy a product or a brand for a better deal. And we also have the impression that some of the December sales has been pulled forward into November. So that is what I was referring to impacting the volatility of our sales within the quarter.

On the next page, we wanted to give you some more insight, as Marco already said, on cross-channel services. So Click & Collect, that is basically you go to a website, you select an item and instead of shipping it to your house, you can pick it up in our stores. And once you're in the store, you might be seduced to buy something else or you can ask a question or we can basically build the customer relation, but that's delivered from the warehouse to the store.

Click & Collect Express, that means you're going to -- you go to the website, you select a store and you can select from the assortment of the store an item, which you can then order is being ordered in the store. And basically, 2 hours later, you get to the store and you can collect the item. So that's the Express dimension, but you can only shop from the store-specific assortment.

And then thirdly, in-store orders, you are in the store, an item might be sold out in the store or you want to buy something which we do not have in the store, but we have it online. And then you can order it in-store and you can either Click & Collect it or you can ship it to your home address. These 3 basically propositions, we are calling our cross-channel services.

And vis-a-vis the pure players, this is, I would say, a very strong differentiating factor. And as Marco already said, these services are growing very significantly. And also, we report them as part of the E-Com channel. We could also report them as part of the store channel, but that's just an arbitrary choice which we have made. It doesn't matter where we report them.

What matters is that from a customer perspective, it works really, really well and customers are happy with it. On the next page, as part of our proposition, both our customer proposition, but also our supplier proposition, we have developed a very healthy and rapidly developing Retail Media business unit. We have almost 50 people who are working on this, and we currently are active in 9 countries.

So if Chanel or Dior or L'Oreal Luxe really would like to advertise their brand messaging in a retail environment, the Douglas environment is basically the place to be. This part of our business continues to grow significantly faster than the top line of the company. It is very, very profitable. So it's also enhancing our EBITDA, and it's growing -- it continues to grow double digits.

The next element of our strategy is to, let's say, is to build a stronger operating model. And as part of the stronger operating model, we are simplifying our IT landscape. Douglas is historically a company which had a lot of decentral decision-making. And as a result of that we are basically currently working with almost 700 applications across our 22 countries.

That's way too many for a company which would like to work with a standardized and a harmonized operating model. Hence, we are in the process of basically simplifying this, and we have defined our so-called Group tech stack. So within those 700 applications, we have selected the preferred applications. And those preferred applications, we basically are rolling out across Europe, replacing local -- basically local choices of the past or local legacy.

And basically, the dark green countries on the slide, so which are -- is a significant portion of our business are those countries which are now fully on our Group tech stack. And the country with an arrow, so Poland, Czech, Slovak, Hungary and Lithuania are the countries where we've recently implemented our Group tech stack and basically retired our local legacy systems. So you can see the idea is that over the next few years, Europe is going to be painted dark green.

By the way, Italy and France have a different color versus most of the others. Why is that? Because in Italy and France, we are also on SAP, but we are on all the version of SAP versus the dark green countries. So at a certain point in time, we also want to move France and Italy to, let's say, the dark green level. But the message here is we are well on our way to simplify and harmonize and standardize the operating model of Douglas.

Similar message on the next page. What does it show? On the next page, it shows that historically, we had basically in every country, different payment providers, both on the store side and on the E-Com side. We had probably close to 20 different providers in the store domain and the E-Com domain on the left side of the slide. Basically, we have now signed an agreement with a preferred payment provider.

And you can see on the right side that more than half of our countries on the store side and already 2/3 of our country on the E-Com side migrated to this, let's say, preferred partner. Again, an example of simplification and standardization. So this is a process, both in terms of IT and payment, which will take a few more years. We are making investments. We're making changes, but it all should contribute to building a stronger, let's say, operating platform for Douglas.

So to conclude, in summary, we believe that we have delivered a solid performance as Europe's leading Premium Beauty retail amidst a challenging market and economic environment. Our market keeps growing, albeit at a lower pace with a flattish development in Germany and France, which weighs more heavily on our sales because more than 50% of our business is driven by Germany and France.

We do see a subdued consumer sentiment and increased price sensitivity, which leads to notable sales fluctuation and promotional pressure impacting our gross profit. We also see that the E-Com channel is growing faster than the store channel. There is more pressure in the store channel, not only at Douglas, but also in the wider markets. E-Com is boosted by the cross-channel services as well as by a strong performance of both our Partner Program and Retail Media.

We continue to invest in strengthening our USPs, Unique Selling Proposition towards our customers, the unique integration of often online and the further development of the exclusivity of our brand range. And we also continue to work on the future readiness of our operating model by the development of our store network and the harmonization of our IT landscape.

And as Mark already said, our guidance for the full year '25-'26 remains unchanged. With that, I want to move to one more slide, which is actually not a slide. It's a video. It's actually commercial because we are today on the 11th of February. And don't forget, in 3 days from today, it is Valentine, and that is very normal that you are buying something for your beloved ones and what is a better place to buy something at Douglas or NOCIBE. So please, operator, can you please move to the next slide and show the commercial.

[Presentation]

Okay. Thank you very much. With that, operator, we wanted to move back to you, and we wanted to provide an opportunity for Q&A.

The first question comes from the line of Vandita Sood from Citi.

I just have 2. So firstly, I was just wondering on the development of your 2 new brands. What is the structure in place? Is that -- would that be like a corporate brand or I guess the other question I had was you're seeing promotional intensity pick up probably because people are getting a bit uncomfortable with all the price increases and waiting for promos.

Is this a good opportunity for you to sort of develop your own brands that are maybe premium but at a lower price? And then my next question was just, again, if you could comment on categories in this sort of a macro environment, do you see that maybe skincare is more resilient than, let's say, perfumes or yes, just what are you seeing in terms of category trends?

Okay. So Vandita, first of all, thank you for your question. So first of all, you asked the question about the 2 new brands. Those brands are not being owned by us. We have signed an exclusive agreement to be the primary distributor of those brands in the 22 countries where we operate. And we are now in the process of launching those brands. So I can't say anything about the first results.

In terms of promotional pressure and the promotional development, over the past few years, we did -- we have seen that many brands have increased prices, so driven by the brand owners, and that has led to a disproportionate growth, I would say, of the prices in certain categories. And we do see that certain customers are now becoming a bit more hesitant to buy those brands at the full price.

Hence, they wait for the promo before they make the purchase. We also see that a number of brand owners have understood that they have basically been too eager, I would say, to create value/increase the prices of the products. And we can also see that some of the brands are taking initiatives by launching different propositions against on average lower prices. We do believe that our own brand portfolio, let's say, provides an opportunity, let's say, for customers to buy a good Premium Beauty product for a lower price.

At this point in time, we do not see an acceleration, let's say, of our corporate brand growth. And your last question was about categories. So if I make it kind of simple, so I said we have seen a slowdown of the growth in the markets. Basically, we can -- we see this slowdown across fragrance, skincare and color. Hair care is an exception because hair care is basically growing double-digit from a market perspective in most markets.

But that is mostly driven by the fact that more retailers, and we are leading that are starting to basically add the hair care category to basically our store network. So with every store we open or refurbish, we're adding the hair care category. And we're also adding brands. One of our fastest-growing brands, by the way, in hair care is Kerastase. So hair care is significantly growing.

Fragrance is our biggest category. And for a number of years, we've seen that fragrance has grown ahead of the total market. We still see that the fragrance category is growing, but the fragrance growth is kind of normalizing. We also got some questions recently, is there kind of a fragrance fatigue at customer level. We don't see that.

So if the growth is slowing down or the growth is normalizing, I wouldn't consider that a fatigue. And when you look to skincare and makeup, let's say, the performance of this category is a bit mixed by country. So it's -- there's not one European trend to be stated about skincare and fragrance. Okay. With that, we move to the next person.

The next question comes from the line of Joffrey Bellicha Meller from Bank of America Securities.

You've talked a lot about exclusive brands on the call, and I was just wondering if you can provide us with what percentage of sales is currently coming from exclusive brands and how this has grown maybe compared to last year?

And if possible as well, can you give us a bit of an outlook as to where you would like this percentage of sales to get to? Because obviously, I think this is quite a support potentially for the gross margin going forward in a more promotional environment. That's my first question.

And then the second question, if I may. You've spoken about the performance of the categories already, but is there a difference in the markdowns or the promotional activity across the categories? And can you be a little bit more active within the store base to bring forward the categories that are maybe less promotional? Is that something that you're working on?

Okay. Marco will take the first question, and I will take the second question.

Hi Joffrey. You're right, Corporate brands and exclusive brands are a key element for our strategy to differentiate and safeguard the margins on the industry brands. The 2 of them combined represent a share of sales, which is today in the mid-teens, so slightly above, let's say.

And so of course, the vast majority is still third-party brands, but our focus is really to grow on this share -- and primarily, it represents a growth in the, I would say, exclusive brands in our expectations because with the corporate brands, we do cover a good share of the, let's say, offering, especially in the skincare and makeup categories.

So we do expect also the corporate brand share or sales to outgrow a bit the total top line, but not as fast as the exclusive brands. Now whether you ask if it's going to become, let's say, a majority, no, this combined sales share, but we do expect it on a medium-term basis to become closer to a quarter around this level.

Okay. And on your second question, your question was if we see a change in the promotional dynamics between categories. And I would say no. I cannot say that the promotional dynamics are now fundamentally different for fragrance versus makeup in comparison to the quarters before.

And your second part was if we cannot move customers in the stores towards, let's say, the less promotional brands or maybe more of the margin-enhancing brands. And the answer is yes. We are working on that. And clearly, we are instructing our almost 16,000 beauty advisers and informing and motivating them to basically get customers focused on the brands which are the most unique and with the more attractive, I would say, profitability.

At the same point in time, many customers walk into the store with their smartphone in their hands. So while we are talking about the product, they are looking online for, let's say, okay, what is the competition offering. So this transparency in terms of pricing clearly makes it more difficult, let's say, to do the sales space. But yes, we are working on that.

The next question is from Yashraj Rajani from UBS.

I've got 2 from my end, please. So the first one is maybe just it will be helpful to try and understand what level of growth we've actually achieved in the second quarter to-date, just to try and understand better as to what we are underwriting for the second half to get your guidance?

And maybe just a follow-up to that would be what gives you confidence that the underlying Premium Beauty market will actually have a recovery in the second half? So that's the first question. And then the second question, is more to do with your SG&A. So obviously, to get to again your EBITDA margin guidance, right?

Like there's probably a bit of margin improvement that you're underwriting in the second half, which is probably coming from the cost savings. Can you maybe give us some quantification of what those cost savings might be and which areas they might come from to again, better try and understand the mix between gross margin and SG&A improvement to get to your EBITDA guidance?

I will take the first question, and Marco can take the second question. I did not completely understand your first question, but let me give an attempt in my answer. Yes. So we did, let's say, 6.6% growth in Q1 last year.

Last year, we did 6.5% excluding Disapo.

6.5% excluding Disapo in Q1. And in the rest of the year, so Q2, Q3, Q4, we did around 1-ish percent. 1.7% growth for the remaining 9 months with a negative Q2 and an improvement in Q3 and Q4. So we are now cycling, let's say, a tougher Q2 and a slightly better Q3 and Q4 are ahead of us.

And that is basically the reason why Marco said that we believe that our sales outlook is now cycling softness in last year. Hence, we are more optimistic about our ability to grow the sales in the remainder of the year. That is not so much driven by an expectation of the improvement of the market.

So we expect basically a continuation of, let's say, from a Continental Europe perspective of the growth which we currently see. So I said already earlier, we expect around 3% for the next few years. I did not say 3% for the next 9 months. That could also be 2.2% for the next 9 months or I don't know. That would be too speculative. So basically, our assumptions are based on -- or our financial planning is based on these assumptions. Marco?

Yes, of course. So you're right, yes first to reach basically the guidance in the year-to-go to be an improvement both in the sales and in the margins. As much as we are cycling against a softer sales pace, we're also cycling against a softer gross profit margin trend. So of course, we have an underlying assumption to be able to stabilize this trend.

In reality, we do factor in a slight margin dilution in the gross profit level also in the year-to-go to be compensated with SG&A efficiency. In this case, we expect, let's say, stores to ramp up into a run rate, let's say, performance and therefore, improving what we have witnessed so far. but also, let's say, general cost consciousness.

So not, let's say -- let's say, headline assumption to reduce certain costs or cut certain costs. But in any case, a continuous focus on our spend. And this is, in fact, resulting into OpEx actually performing slightly better in Q1 than our planning and our budget.

And therefore, in the year-to-go to, let's say, if you do the math and wanted to reach 16.5%, you would need 30 basis points, 40 basis points of EBITDA margin improvement, which, let's say, in the best possibility that should come from better SG&A efficiency.

[Operator Instructions] The next question comes from the line of Jurgen Kolb from Kepler Cheuvreux.

Three quick ones. First one on current trading and Q2. Obviously, here in Germany, the weather conditions have been quite snowy and cold. I was wondering if you've seen any customer traffic declines in your stores as a consequence there? And maybe by the same token, maybe an improvement in the online business just from current trends, one quick comment.

Secondly, you mentioned that France and Italy still using a different SAP system. When do you think you can upgrade it to the rest of the pack so that you have a harmonized SAP system? And the last one on inventories. Inventories have increased, obviously. Maybe a quick comment on how you feel the inventory situation looks like. Is there maybe also a little bit of a gross margin risk or pressure which may hamper the gross margin going forward in order for the inventory level to go back to a more normalized level?

Let me take the first question and you take the second and the third. So first of all, Jurgen, thank you for your questions. On the current trading, we can say that the pattern in January was very similar to basically the development in Q1.

So yes, we did see significant impact in terms of traffic driven by weather conditions, not only in Germany, but also in Spain and Italy, in Sicily, in Poland. There has been a lot of snow or water or wind in many countries. We also have seen a very positive development of the E-Com channel, let's say, which is offsetting a part of that.

And we see between weeks different traffic patterns. So when there is a lot of snow, people don't get to the store and then the week after they're catching up picking up a little bit. But our current trading, so the first -- the start of this quarter is very similar to Q1.

Okay. Then taking the second and the third question. So on the ERP, France and Italy, so we're currently in, let's say, in the middle of a planning phase for a more significant upgrade to, well, S/4HANA. So we're currently running on ECC as, let's say, the Group tech stack.

And so what we're assessing now is the convenience of rolling out the current tech stack also to big countries such as Italy and France versus developing the new S/4HANA rollout and therefore, roll out directly an upgraded, let's say, future-proof system. Most likely, it will be the second.

That would entail a little longer time, let's say, to roll out into Italy and France. And it's, in any case, a priority of our midterm planning, let's say, to reach to an upgraded IT landscape across the Group. On the inventory, Jurgen, I commented earlier, you're right, year-on-year basis, spot as of the end of December, I think inventories are up 6% on a year-on-year basis.

Let's say, when we, of course, not measure the spots, but the average to do the DIO calculation, it's slightly lower because the end of December is, of course, highly dependent on the -- really the last 2 weeks of sales and trading. And therefore, you need some time to, let's say, readjust the working capital. We are putting in place actions to improve our rotation, as we mentioned.

So even with new tools to optimize the inventory rotation. Let's say, so far in terms of stock quality, we don't see, let's say, meaningful or notable, let's say, deterioration that would hint at a potential risk of impairment write-downs or necessity to invest cash margin to, let's say, reduce inventories or liquidate stock. We're rather tackling it with, let's say, efficient supply chain and better tools to, let's say, allocate the stock where it's needed basically.

The next question comes from the line of Nick Barker from BNPP.

Just one for me. You performed very strongly online through the E-Commerce channel. But taking a step back, what are your thoughts on TikTok Shop and Agentic AI? Do you see these becoming long-term threats to your business? Any comments on that would be great.

Shall I answer that? So first of all, the TikTok Shop, clearly, we're following that closely. And we have seen that in the United States, that has been a phenomenal, I would say, success because we don't operate in the United States. The TikTok Shop has now also arrived in Europe and in Continental Europe in a number of our key markets.

At this point in time, we do not see a lot of traction in the TikTok Shop with premium brands. So with products which have a higher, I would say, price versus the fast-moving consumer goods brands, which you might buy in a drugstore. TikTok is a very important social media channel. So we fundamentally embrace that, and we are doing a lot in -- with TikTok, but we are currently withholding when you talk about the TikTok Shop.

Agentic AI is clearly going to create a revolution in the world. We are not only following it closely, but we are also working on a number of plans and initiatives. And I would say it provides as many opportunities as potential threats. But ultimately, we believe that we are well-positioned with our omnichannel proposition, let's say, to benefit and/mitigate these developments.

The next question comes from the line of Adam Cochrane from Deutsche Bank.

Just a question on the product cycle. How are you feeling about the product development coming from your suppliers? There was a period over the last few years where in skincare, there's a lot of new dermatological products. There was a number of new fragrance launches.

Are you finding that there's less new exciting products coming into the category than maybe we saw over the last couple of years? And are you led to believe at least that your suppliers are going to start to improve and increase the new products coming through?

And then second question is the performance of the category in the U.S. appears to have been relatively robust compared to some of the weakness in Europe. And given it's a global category, would you say this is largely just down to a difference in, in the sort of macroeconomic conditions rather than anything more specific?

Let me take that. So thank you, Adam, for the question. So first of all, when you talk about the product cycle, I think it is -- if you take a step back, during COVID and the whole world was basically closed and also the beauty brands were very hesitant in launching new stuff. So when basically the world reopened, including our store network, there was a really big boom of innovations, which were basically sitting in the pipeline for 2 years.

And in the following 2 years, we've seen a lot of new products, new brands, new stuff arriving. And I think it is fair to say that in the recent year, 1.5 years, we see a slowdown in terms of newness, let's say, in the category. And that is also partly impacting the slower growth of the market. We do see a number of, I would say, brands or segments which are still very hot.

So a brand like Sol de Janeiro is doing really well at Douglas Rituals is doing really well at Douglas. The Korean brands are doing really well globally, including at Douglas. So that is all helping. I made the point already that the hair care category in Kerastase is doing really well at Douglas.

But it's also fair to say that some of the more, let's call it, classical brands are having more challenges in growing their sales. So Chanel is not reporting externally, but Dior is reporting externally. Clinique Estee Lauder are reporting externally. Those classical brands have, I would say, a very soft development on average. And part of that is driven by a reduction in the innovation pipeline of these brands.

Moving towards the U.S., I do think that in the United States, also Premium Beauty has slowed down versus the post-COVID boost. But I also do agree that based on what we see, and to be honest, we don't buy reports from the United States. So I have to use external sources for that. But I do see that Premium Beauty is doing a bit better in the United States versus in Europe.

And yes, I do believe that the general macroeconomic development in the United States is contributing, let's say to that. And I do think that the European consumer is more hesitant, more concerned driven by the political developments, by the way, from the United States, but also the developments on the east side of Europe around the Ukraine. So that makes our customer and consumer base more concerned and more hesitant in their willingness to basically to spend money.

With that, I think -- thank you, Adam, for your questions. We are coming to an end. Operator, I don't see any more people in the line. So I would like then to wrap up. So to conclude, we believe that we have delivered a solid performance in not an easy environment.

But both the top line and the bottom line of Douglas, I would say, are in relatively good shape versus the rest of the world. Current trading in this quarter is very similar in the first, I would say, month versus what we delivered in Q1 despite the challenging weather conditions. We believe that our omnichannel strategy is -- provides a competitive platform and competitive, I would say, framework to continue to grow our company going forward.

We maintain our guidance for the current financial year, and we're looking forward to see you, let's say, in 3 months from now to report back on the second quarter. With that, I want to say, don't forget it's Valentine's Day on the 14th of February, 3 more days, douglas.de or douglas.nl or nocibe.fr in France are all at your disposal.

Ladies and gentlemen, welcome to the Douglas Group Q4 Full Year 2024-'25 Earnings Results Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Sander van der Laan, CEO. Please go ahead, sir.

Yes. Thank you very much, and good morning to all of you in the week prior to the key week of the year for Douglas, which is basically the Christmas week. Marco and I are happy to share with you on behalf of our company, our results for the fourth quarter, for the full year. And also, we want to come back on guidance for this year and outlook for basically the midterm.

So let me move to the next slide. So I will start with a brief intro, hand over to Marco, who will talk about the financials, and then I will come back with a strategy, business highlight update and then we will offer an opportunity for Q&A as you are used to do with us.

So let me first reflect on the last quarter. So our Q4 ended on the 30th of September, and we are happy to report that after a year, I would say, with a number of important changes into the market landscape, we can report a solid growth for our final quarter 4. In a challenging market, we have been able to, let's say, to deliver growth. In the store channel, we have grown 0.6%, which is a combination of new store openings, refurbishments and our like-for-like stores. And on the E-Com side, in the E-Com channel, we grew at 7.3% on a like-for-like basis.

As you know, we have divested Disapo, our online pharmacy last year in the fourth quarter. So actually, the last 2 months of the quarter, we were already fully like-for-like. But in the first month, we were still cycling, let's say, the ownership of Disapo. So on a like-for-like basis, e-com has grown 7.3%, stores has grown 0.6%. And that means that our omnichannel growth, which is the most relevant component, has grown 2.6% to a sales number of EUR 981.9 million.

Our adjusted EBITDA has gone down with 11.4%, which is largely driven by the pressure which we encounter on the gross profit line because in this tough market, we need to fight hard to bring sales in and to defend our competitive position. And that means that pricing and promotional activity, let's say, is causing pressure on the gross margin. I would say that our cost development for the quarter and also the full year, we had it well under control.

That means that we can conclude on 2024. And we are happy to share with you that we did achieve the guidance, which is to be transparent, the revised guidance, which we put out into the market, that we finished well, I would say, in line with the guidance with a solid growth. We have more than doubled our net income. So total growth for the full year, 3.5%, excluding Disapo; in the Store channel, 2.5%; in e-com, 5.6%. We delivered an EBITDA margin of 16.8% and net income of EUR 175.4 million, which is a growth of almost 109%. And clearly, our new, let's say, financing structure, which we put in place post IPO has significantly helped us to improve net income.

Net leverage ended by the end of the quarter -- by the end of the year at a leverage of number of 2.9, which is basically you could say stable, one notch up versus the year prior. However, if you break down our leverage in our financial debt and leases, then the leverage on our financial debt came down from 2.3 to 2.1. The fact that the total leverage is basically stable is the result of the expansion of our store network and some other incidental elements which Marco will refer to.

And then the third message is, we are also setting the guidance for the current financial year '25-'26. We are already almost at the end of Q1, but the most important week of the quarter and week of the year is basically starting today. So, let's say, that is an important, let's say, remaining 2 weeks, which is going to have an impact on this quarter as well. Our guidance for the current financial year is that we expect that our sales will land somewhere between EUR 4.65 million and EUR 4.8 million. If you would translate it in percentages, the midpoint of this range would indicate a sales growth of 3.3%.

Our adjusted EBITDA, we expect an adjusted EBITDA of around 16.5%, and we do expect that our leverage will end by the end of the financial year in the range somewhere between 2.5 and 3.0. And Marco will come back on the guidance and also the midterm expectations a little bit later.

Let me give you a brief update about the market development. So post COVID, we are aware that the global economy went through, I would say, an acceleration phase. Countries were -- retail was opening up, consumers were spending again. And basically, you could say in the first 3 years post-COVID, the premium beauty market globally, but also in Europe, has shown a significant growth. 8%, 9%, 10%, 11%, 12% were kind of the growth rates we were experiencing in most of our countries. That has changed significantly in the course of our financial year '24-'25. So in the financial year '24-'25, in Continental Europe, we operate in 22 countries in Continental Europe, we believe that the market has grown around 3%. The positive part is we still talk about growth, and many consumer markets can't talk about growth. So we talk about growth, it's around 3%.

The negative part is it is a significant slowdown versus, let's say, the years before. And if you would break down this growth into the different geographies, the different geographies are developing quite different. Our most important markets are Germany and France. The German market has been flattish in '24-'25 and the French market has been in decline in '24-'25.

For the years ahead of us, we expect that the premium beauty market in Continental Europe will grow somewhere between 3% and 4%. We expect that for the current financial year, that will more likely be closer to the 3%. Although a bandwidth of only 1% is not so much, it could be that the dynamics of the market are changing in the course of this year. But basically, we're working with the hypothesis that the premium beauty markets will grow 3%.

And we believe that within that premium beauty market, that e-com will grow faster and stores will grow a little bit less. But we also believe that in that premium beauty market that omnichannel is the winning model for the Douglas Group going forward. Still almost 1/3 of all the premium beauty sales is being done in stores, a little bit more than -- almost 33% is being done in e-com, and we are operating in both channels.

From a market share perspective, in France, we have been able to grow our market share in the last financial year. So in a declining market, NOCIBE has made a step-up and the market share of NOCIBE has grown. And as part of our current trading, we can also state that the French beauty market has started to grow a little bit in October and November. And in the first 2 months of this year, NOCIBE has also been able to grow its market share a little bit in this now slightly growing market.

In Germany, we have to admit that we have made a mistake in our press release, which I now want to correct because in the financial year '24-'25, where the German market was flattish, our market share was also flattish. Our Store share has grown and our e-com share has declined a little bit. But the combination of that, our omnichannel share basically has been flattish in '24-'25. That was incorrectly stated in the press release this morning. We apologize, people make mistakes. We have made a mistake. So hence, we are correcting it now.

In the current financial year, which started on the 1st of October, the German premium beauty market has shown a slight growth. And in that slightly growing premium beauty market, the Douglas Group has increased its share in the first 2 months of the current financial year. I'm not in a position to quantify that. We will come back in the middle of January with a trading update, and then we will release our sales numbers for clearly the group and also the relevant segments.

So to wrap up, around 3% growth in the market last year, 3% to 4% in the years ahead of us. This year, more likely around 3-ish. And in the German and French market, we do see a little change because those markets started to become a little bit more positive versus the recent trends, which is very helpful for us because that is our #1 and #2 country.

With that, I move into basically the next slide that I have already actually said a few things about it. We have made a solid start into, let's say, the new financial year. Solid start is alluding to basically October, November and the first 2 weeks of December. I just remind you that the most important week is ahead of us. And also from a profitability perspective, the month of December is very, very, let's say, disproportionately big in terms of contribution to both the quarter. So hence, we need to talk with caution about the current development. On the 19th of January, we will release a trading statement on Q1, which, by the way, is not talking about EBITDA, it's talking about sales. And in the middle of February, we will come back on our Q1 numbers.

Then the next message we want to bring across is that Douglas is considering a new step from a geographic expansion perspective. We currently operate in 22 markets, and we released 22 Continental European markets, which are basically the mint countries on this slide. And 2.5 years ago, we released the ambition that within those 22 markets, we want to expand with roughly 200 new stores, net new store openings, and we want to refurbish roughly 400 stores in a 3-year time frame.

Next year is the third year or the current year is actually the third year of that 3-year time frame, and we're well on track. We do see that post 2026, we are starting to reach a position in a number of countries where it will be more difficult to open a significant number of new stores. In France, in Germany, in Italy, we do believe that we have a very, I would say, mature market position. There are still optimization opportunities to open a few stores, to close a few stores. Net-net, certainly in Italy and in France, we see some opportunities to maybe add a few more stores. We are still opening significant number of stores in CEE, but also in Belgium, but the speed of that will start to slow down.

And therefore, we already started with basically an exercise where we have been studying a number of countries, first and foremost, a number of adjacent countries to the current Douglas geographic footprint. But we've also looked, let's say, into the Middle East. And when I say the Middle East, I quite specifically mean the GCC, the Gulf countries. So these are 6 countries. The common language is Arabic. The dominant religion is Muslim. However, in some of those countries, there are very big groups, certainly in Dubai of, let's say, international people. There are 65 million people living in this region. The population is rapidly growing, not only organically, but also by immigration. And wealth per capita is growing disproportionately fast. And this part of the world is very, very into beauty.

We are not the first one who discovered that. On the contrary, all the beauty brands are represented there and a number of the beauty retailers are represented there. We believe that this is an opportunity for Douglas. And therefore, we've decided to install a dedicated project team under the leadership of Agnieszka. Agnieszka is currently responsible for the CEE. That is our most expensive expanding kind of territory. Agnieszka brings 25 years of Douglas experience. And under her leadership, the team is going to look at the possibilities for an entry into the Middle East, specifically into the GCC countries.

We have nothing decided yet. There is not an approved plan yet. But the firm intention is, let's say, to conclude on this in the course of 2026. You should not expect store openings or e-com openings in 2026. That will be too soon, but we are an ambitious company. So after 2026 -- there is another year. So hopefully, that could be the year that we can start. But again, we first need to agree on an approved plan.

Our guidance does not include potential investments and also not potential upsides, let's say, into this market. Once we have agreed on a plan, clearly, we will look at the implications on our financials. And if required, we will come back in terms of the outlook for the midterm. But for the guidance of the current financial year, which we are releasing now, this has no implications at all.

With that, I want to hand over to Marco, who will give you an update on -- a deeper update on the Q4 numbers and the full year financials before I will come back. Marco, please?

Thank you, Sander. Dear analysts and investors, also welcome from my side. Before diving into our full year results, let me start with some insights on our Q4 performance.

Starting with the sales. In Q4, we achieved EUR 982 million, representing a growth of 2.3% year-on-year or 2.6% when we exclude Disapo. On a like-for-like basis, sales increased 1.2%. This growth was driven primarily by a strong performance in e-com, up 7.3% ex Disapo, supported by store sales grew 0.6%.

Turning on profitability. Adjusted EBITDA came in at EUR 134 million, an 11.4% decrease compared to last year. Reported EBITDA declined by 15% to EUR 130 million. The margin declines reflect the ongoing promotional environment. This weighed on our gross profit margin. In addition, slightly higher operating costs, including continued investments in the business could not be fully offset by the sales growth we delivered.

Finally, in the last quarter of the previous financial year, we had a larger impact of year-end closing entries and provision releases that impacted the quarterly year-on-year comparison, particularly in DACHNL and CEE, as we shall see shortly. In summary, while the quarter showed solid top line momentum, particularly in e-com, the competitive environment continued to impact margins.

On the next slide, you can find the Q4 sales performance of our 5 segments as well as their adjusted EBITDA margin trend. And by the way, we thought to streamline this section given the many subjects that we can talk about today to focus more on the broader picture. All of our segments achieved positive sales growth in the fourth quarter with the highest growth from Central and Eastern Europe and Parfumdreams/Niche Beauty. France delivered a 0.6% sales growth, which in the context of a slightly declining market in the quarter and year-to-date, as Sander was mentioning, represented a gain in market share increase.

Similarly, in Germany, as we just commented, the market dynamic shows signs of improvement for an overall flat year-to-date share of Douglas. Adjusted EBITDA margins declined across all segments with the highest margin geographies seeing the largest drops due to strong prior year comparison, and the decline mainly reflects the more promotional market as we have just commented, as well as lower supplier bonuses caused by limited volume growth. Central and Eastern Europe was additionally impacted by the ramp-up of the new warehouse as we've just opened in Poland.

Regarding supplier income, weaker trading compared to initial targets results in lower-than-expected volumes, reducing the bonuses that typically lower our cost of goods sold. By the way, the reverse also applies. The moment trends improve, stronger volumes should support better supplier terms and gross profit margin.

My next slide summarizes our quarterly sales and margin trend in this past year. Now reflecting on the full year performance, we can see how volatility has impacted our results with sales trends ranging from plus 6.5% in Q1 to even slightly negative in Q2. This also implies that we are now in this current quarter comparing against the strong sales growth performance we had in Q1 last year. Since then, we've been able to achieve a solid sales growth trend as we have adjusted to changed market dynamics. However, this has impacted our margins throughout the year.

As we adapted to a changing consumer environment with a greater focus on price and promotion, we invested in our gross profit margin in order to sustain sales growth. SG&A as a percentage of sales were only slightly above the prior year.

On the next slide, I will walk you through our full year performance and achievements. With reported full year sales of EUR 4.58 billion and an adjusted EBITDA of EUR 768 million or 16.8% of sales, we delivered on the guidance that we updated in March this year. In a tough market environment, we were able to achieve 3.5% sales growth ex Disapo. And thanks to a sharp focus on costs, we were able to limit the impact of a lower gross profit margin, resulting in a decline of adjusted EBITDA of only minus 5%.

One relatively small but important cost component is represented by our IT costs that increased strongly as we continue to invest in our beauty card, logistics setup and technology stack in general. On another note, I'm pleased to show that we reported a 3.6% higher reported EBITDA, benefiting from a strong reduction in cost adjustments. Although nonrecurring in nature, I believe it's still important to prove that they did phase out in our first year -- full year after the IPO.

My next slide is about our Store and e-com sales trend. During financial year '24-'25, e-com continued to outpace the stores in terms of sales growth, delivering a 5.6% increase. The E-Com channel now accounts for 32.8% of the Douglas Group sales, up 20 basis points from the previous year. Store sales were primarily driven by new store openings, while the channel's like-for-like performance was flat. However, please bear in mind that in our definition of store like-for-like, the majority of refurbishments are excluded as the stores remain closed for works likely for more than 2 weeks.

If we include refurbishments and relocation in a same-store growth definition, this becomes plus 0.9%. Furthermore, as part of our Let it Bloom strategy, we want to offer the most customer-friendly omnichannel journey by further improving the seamless experience across our physical and digital channels. To achieve this, we are actively modernizing and expanding our store network and investing in our digital capabilities. With that in mind, it's important to flag that we are experiencing a high growth of our omnichannel services such as Click & Collect, Click & Collect Express and in-store order.

As we report our sales figures, omnichannel sales are included in the E-Com channel, but if they were reported in the stores channel instead, our like-for-like sales growth would be approximately 1% further higher than reported.

Let's now go to the next slide with our full year P&L. Now let me briefly summarize the P&L, starting from the solid sales growth of 2.8% to EUR 4.58 billion, as we have just commented, and an overall stable gross profit of just over EUR 2 billion. Thanks to a sharp focus on costs, we were able to minimize the impact from a lower gross profit margin, higher IT spending and temporarily higher logistic costs due to the commissioning of 2 OWACs with EUR 768 million in adjusted EBITDA [Technical Difficulty] increased to EUR 12 million in the last 12 months from [ 78 ] in our IPO year, and this year's value is now a more normalized level also for the next year, while we are still in the process of consolidating legacy systems and processes as well as rolling out new warehouses and tech stack.

D&A charges were up 11.9% as a result of higher depreciation related to the rights of use of our growing store network and new logistics facilities, investments in our existing store and warehouse fixed assets and IT. Furthermore, intangible assets impairment were EUR 4 million higher than last year. In 2024-'25, total D&A were equal to 8.5% of sales, and we expect the total D&A to remain stable as a percentage of sales also in '25-'26. The financial results improved significantly, thanks to the financing structure that is in place since April '24, and that was further optimized by the repayment of the bridge facility in March of this year. Within the reported figure of EUR 133 million, we have approximately EUR 61 million of IFRS 16 lease liabilities, financial expenses. For '25-'26, we expect to benefit from a lower net financial debt and slightly lower interest rates compared to '24-'25.

Moving on to taxes. The effective tax rate that you can calculate on this page is around 25.5% and benefited from a positive effect after applying the corporate income tax reduction legislation in Germany to certain deferred tax items. For the new financial year and onwards, we would expect to return to a normalized tax rate of approximately 30%. For your information, this change in corporate income tax rate is applicable for the income taxes from 2028 to 2032 in a progressive manner. That's why an actual implication on the current year taxes will be visible only since then. Lastly, our net income more than doubled to EUR 175 million or EUR 1.63 per share.

Let's now go to the next slide about the net working capital and CapEx. Our average net working capital decreased by EUR 34 million to an amount of EUR 200 million, equaling 4.4% of this year's group sales. The average amount of inventory was higher compared to a year ago due to mainly the opening of new stores as well as higher purchase prices. However, days of inventory outstanding remained stable at 122.

Since the second quarter of the current fiscal year, we rolled out a new supply chain financing program to support and optimize our working capital position. This program helps to further reduce the level of our average net working capital as a percentage of sales by extending days of payable. At the end of September 2025, for your information, supply chain financing was utilized for about EUR 145 million. And in the calculation of the average LTM net working capital, an average of EUR 75 million was utilized. And therefore, the full benefit will be included in the average net working capital calculation KPI next financial year.

On the right, in light of our growth strategy, our CapEx for the full year was higher compared to a year ago as we increased the number of owned store openings to 90 compared to 52 in the previous year, with 42 Central and Eastern Europe had the most store openings.

Let's now go to the next slide about the free cash flow. I already elaborated on most of the drivers that you can see on this chart. I would like to point out the others column that is potentially including primarily changes in provisions. But more importantly, I would like to make a remark about property rents. We are sometimes asked how our free cash flow looks like after rental costs. Therefore, we added on the right a detail. In financial year '24-'25, the sum of payments for leases, including the interest component totaled EUR 315 million, of which EUR 253 million are payments for lease liabilities and EUR 61 million are payments of the finance component that sits within the finance expenses in the P&L as we have commented earlier.

The next slide is about our available liquidity and net debt. We continue to have a solid financial structure with EUR 300 million in available liquidity as of the end of September. Please note that the year-on-year comparison is still affected by the utilization of cash on the balance sheet to repay the bridge facility in March 2025. In the middle chart, you can see the net debt structure, showing a significant reduction in net financial debt from EUR 1.18 billion to EUR 958 million.

The net financial debt reduction was partially offset by an increase in lease liabilities by EUR 200 million versus the prior year. This increase is mainly due to the opening of new warehouses, 90 new stores crossed, as we said, in the last 12 months and contract renewals for existing stores. If we look at our leverage ratio, we see an increase from 2.8 to 2.9x, again, as a result of the net debt that we have just described and also the 5% reduction in adjusted EBITDA that we commented earlier.

On a pre-IFRS 16 basis, our leverage would amount to 2.1x, an improvement from 2.3x in the previous year. And this is also the first time we are disclosing this picture to enhance the transparency of our capital structure.

Let's now turn to my last 2 pages with our full year outlook and our midterm expectations. Thanks to the growth initiatives in our Let it Bloom strategy, we expect net sales to increase to a range between EUR 4.65 billion and EUR 4.8 billion. This implies a growth rate between 1.6% and 4.9% with a midpoint at 3.3%. The relatively broad range reflects the volatility in the market that we have been commenting so far.

In a dynamic market landscape, we expect an adjusted EBITDA margin of around 16.5%, reflecting also our ongoing investments and strategic initiatives to drive long-term growth. We expect a net leverage ratio of between 2.5x and 3x with an average net working capital as a percentage of sales to decrease below 4% and CapEx of around EUR 150 million. Please note that this leverage indication as of the end of next September is, of course, as reported, therefore, including lease liabilities. And we do expect the difference between the net leverage pre- and post-IFRS 16 to be in line with this year's value.

Our investments will be focused again on the store network and the upgrade of our IT systems. This year, we delivered a record number of 90 openings, up from 52 in the previous year. And we expect 2026 to be in between these 2 values, so higher than financial year '24, but lower than financial year '25, as also Sander was alluding to within our 3-year target earlier.

We had 90 openings less 16 closings this year for a net growth of 74 directly operated stores. And in terms of closings, we foresee similar numbers in the future essentially in connection with the normal network maintenance, especially in more mature markets.

On the next slide, you find our midterm expectations covering the next 3-year time horizon. Our strategic priorities remain anchored in the Let it Bloom omnichannel strategy with the key initiatives that we have been developing and are planned for the future. However, we had to reflect the changed market conditions that now point in our estimate to a midterm market growth rate of approximately 3% to 4% per annum.

In this context, we expect our sales to similarly grow in the low to mid-single-digit range on the basis of the current geographical footprint. So to be clear, no further geographical expansion such as the considered potential Middle East entry is included in these targets. We expect e-commerce to grow at a faster rate than stores towards the mid- to high single digit, while the stores channel is expected to grow at a low mid-single-digit rate.

We expect to maintain a stable profitability at adjusted EBITDA level with an increasing focus on our operating model aimed at counterbalancing potential pressures from market competition. Finally, talking about capital allocation, we will continue investing with ROI discipline with a CapEx percentage on sales that will slightly reduce over time, and we strongly target to become a dividend-paying company in this medium-term outlook, feeling comfortable with a leverage in the range between 2x and 2.5x, including leases.

This concludes my section of today's presentation. Thank you very much for your attention, and I will hand the call back over to you, Sander.

Yes. Thank you very much, Marco. So I just wanted to give you an update on our kind of strategic initiatives, and we will do that first by an overall update, and then I will zoom into a few of the initiatives. So until the last, let's say, quarterly results release, we have presented to you kind of the strategic framework, as you see it on this slide, which is based on what we call 4 pillars and 1 foundation. And we made a small -- you could say, optically small adjustment, let's say, in our strategic framework because we are basically bringing Pillar 4, let's say, to the bottom of the slide, which is being explained on the next page.

And why are we doing this? We want to make a distinction between kind of the customer-facing part, Pillar 1, to be the #1 beauty destination in all our markets. Secondly, our software proposition to offer the most relevant and distinctive range of brands. And thirdly, we want to deliver the most customer-friendly omnichannel experience. This is all visible for our customers. But let's say, behind the scenes, we are building a stronger foundation where we want to combine the power and the drive of our people. We have almost 20,000 motivated people who want to make life more beautiful with passion, appreciation and ownership. These are our, let's say, company values. And we also want to build a stronger and efficient operating model. And this operating model, Marco was already alluding to it, that is, first and foremost, about harmonizing and standardizing processes because historically, we have been a very decentral organized company where every country had created its own processes, and we are in the process of harmonizing and aligning those.

By doing that, that gives us the opportunity to implement a more standardized, efficient and effective tech application landscape because we currently are using too many local-for-local IT applications, and we want to replace them by, you would say, state-of-the-art group standards. And thirdly, we are implementing a new, let's say, omnichannel supply chain model. The combination of these processes, systems and let's say, supply chain changes should lead to a much more efficient operating model. But that is all technical stuff. And we want to make clear also towards our own people that we need our people to do that. And that's why we thought it will be better, let's say, to bring these values and HR elements and the technical stuff together in the ambition to build a stronger foundation going forward.

So what I would like to do now behind, let's say, those 3 pillars and this 1 foundation, there are roughly 20 initiatives, and we have been using -- we had the habit so far to give you an update every quarter about a few, let's say, new developments or relevant things to know. So today, I want to talk about brand communication. I want to give you some insight in our category and brand initiatives. I want to give an update on store network developments, and then we want to give an update on our OWAC rollout.

So firstly, we have made an important step in the current quarter in Q1 '25-'26 with the launch of a new Douglas campaign, which we call Welcome to Beautiful. This is a campaign where we have developed, first of all, a TV format, TV advertising and where we have launched the campaign with 4 new commercials starting in October and ending with the fourth commercial in December.

We want to continue to build, let's say, the Douglas brand as a premium destination. We, as a brand, but also as a retail format, wants to offer beauty categories with inspiring brands, and we want to bring the inspiration of our brand image and the stories which we have to sell across by means of a new campaign, which is not only developed for the TV format, but it's also translated into social media and it's also translated into other, let's say, company-owned and operated communication assets.

So since we are a marketing-driven company, we thought it would be nice to at least show our opening commercial. And at the end of the presentation, I will also give you the opportunity to watch our Christmas commercial. But let me now move to the operator or to our colleagues and see if we can show that.

[Presentation]

Thank you. I hope you felt the inspiration of the Douglas message certainly moving into the peak season because this was our opening in October, and I will just close a little bit later with the message for Christmas.

So moving to the second initiative we want to talk about geographic expansion. So we have opened in the current financial year 90 new stores, we closed 16. So our net opening number has been 74. And we refurbished 139 of our existing stores. And in some cases, we also relocated those refurbished stores. So that means that in total, we have now 213 stores on a network of roughly 1,950. So almost 1 of every 9 stores, which we currently operate is a new store. That means that's a good percentage, let's say, for a premium retailer because that means that our network got younger.

We do not have a lot of legacy investments to do, and it also is important when we talk about CapEx requirements kind of going forward. So great progress, and we opened some really iconic stores. Most recently, we closed our old store in the high street of Cologne, and we opened a fantastic new flagship store, which is actually the picture on the left and in the middle. It sits on a corner. It's 2 floors with 1,300 net square meter sales area, doing really, really well and basically attracting people from Cologne and beyond. But we also opened new flagship stores, let's say, in Belgium, in the Netherlands, in the Czech Republic, in Poland, et cetera. And specifically, in the last quarter, we opened 35 new stores and refurbished 36. So you can see that we have been very, very active. By the way, those 74 net new stores, they have between 5 and 25 employees on the payroll. So we do not only make CapEx investments, we are also making an OpEx, let's say, commitment. And clearly, we do that because we believe that the business case of those stores will be earned back. But for the short term, it is an incremental, let's say, investment. That's the second initiative.

Thirdly, we want to expand our offering and the range of brands we sell. We are a selective beauty retailer. That means that most of our brands cannot be found, let's say, in for instance, a drugstore because the stores, the Douglas stores have to be authorized by CHANEL, Dior, L'Oréal, LUXE, SHISEIDO, Estée Lauder, et cetera, to get the right to sell those brands. And we are, for them, the #1 go-to-client in Continental Europe because we're by far the biggest.

However, with a lot of those brands, we do compete with other premium beauty retailers. And since the brand is the same, that creates price competition, and that puts pressure on the margin. And therefore, we believe it's of instrumental importance to grow the range of brands which are unique to Douglas. First and foremost, the Douglas collection and the 3 brands which we exclusively own, [indiscernible] and Susanne von Schmiedeberg. But the second leg is we want to grow our portion of exclusive brands. So these brands are not owned by us. They're owned by a brand provider, but we signed an agreement with the brand owner that we are exclusively selling those brands. That makes our proposition more unique, and it takes away the price comparison point, hence, it creates more protection of the gross margin.

So the bigger the portion of Douglas brand, the bigger the portion of exclusive brands, the more differentiated we are and the better protected we are from a gross profit perspective. Hence, I'm very happy to share with you that we've launched 5 new group exclusive brands. The term group exclusive brand means that those 5 brands, TYPEBEA, NEST, Drybar, [indiscernible] have been launched in almost all our countries, let's say, in the Douglas universe. And these brands have just started, but are already starting to contribute to a growth of our share of exclusive brands. And there is a lot more, let's say, to come in the pipeline.

First of all, we want to grow the brands which we already have, but we also are accelerating in bringing new inspiration, let's say, towards our customers.

And then the fourth initiative I wanted to give a quick update on is on our OWAC strategy. So we have historically developed a very local supply chain where basically almost every country Douglas had its own supply chain operation. And once e-commerce started to develop in many countries, we duplicated our supply chain operation by creating a separate e-com-only supply chain as well. That infrastructure we're replacing by a network of 7 OWACs, 1 warehouse, all channel. We carry the stock in one warehouse, and we supply all the stores and all, let's say, our e-com customers in a certain geography from one warehouse.

And in most cases, those warehouses are going to be multi-country warehouses. So we opened our warehouse in Hamm 3 years ago, which supplies currently Germany, Austria and Switzerland for both Douglas and Parfumdreams. We have now opened our new -- and also first OWAC in Poland, which started in the summer and has now successfully started to supply all our stores in Poland and all our e-com customers in Poland.

In '26-'27, we're going to extend the reach of this warehouse because this warehouse is also going to supply Czech, Slovak, Hungary, Lithuania, Latvia and Estonia. And over the next 2 years, that should basically be rolled out. And that warehouse is then replacing at least 5 different supply chain facilities, which we are all closing down. In Poland, we have already closed 2 facilities, but we will close more facilities, which should lead to a significant saving in the stock being kept in these warehouses.

In Italy, we already had an OWAC, but that OWAC was sitting in an old building with a less efficient footprint, and we have relocated that warehouse to a new facility with a new partner. Unfortunately, the partner and we, in the beginning, had some starter problems. So we have been facing availability problems towards both stores and e-com clients, that has started to improve more recently, but has certainly negatively impacted our sales development, let's say, in the past few months with recently more improvements. And we do expect that we need a few more months to get it under control. However, ultimately, it will lead to a more efficient and effective operation, where we believe that the logistical cost in Italy will come down versus what they historically have been.

And then last but not least, in BeNe, Belgium and Netherlands, we currently have an online warehouse and a cross-docking facility for Belgium and the Netherlands. We're going to replace those 2 facilities by a new OWAC. That OWAC is going to be opened in the summer of 2026. We've signed an agreement with Bleckmann, which is already operating our current infrastructure. So basically, they will continue to support us, but they will run the new warehouse. And that also means that they have a responsibility to move from the old world to the new world. And that warehouse is going to help us to significantly improve availability and speed towards our BeNe operation as well.

That means that in '26, we bring our sixth OWAC in place, one to go. #7 is planned to be opened in the Balkan region, quite likely in Romania. That is not going to happen in 2026. It's either '27 or '28. We have not completely decided on that, but we are in preparation for that one as well. So that's the update I wanted to give to you regarding our footprint.

In summary, so to wrap up, we are operating into the European premium beauty markets, which is transitioning from a very, let's say, highly dynamic post-pandemic growth period to, you could say, a more muted growth of around 3% in last financial year and 3% to 4% for the years ahead of us, where we expect that the growth in the current financial year of the market will be closer to 3% rather than to 4%. Germany and France are our most important countries. They had a more significant slowdown, certainly in France because the French market was negative, moving into positive territory this year. And also in Germany, we see a small step-up, let's say, in the market environment.

Secondly, our Let it Bloom strategy continues to be the omnichannel strategy for the future. However, in light of those market dynamics, we have made some sharpening up, and we continue to work on efficiency. We continue to make targeted investments in growth initiatives like e-com, OWAC and also our supply chain.

Thirdly, we have finally concluded on '24-'25. We have solid overall growth and results which are in line with expectations and also in line with our updated guidance from earlier last year. Yes, our profitability has been impacted by customer behavior. We have to work hard and fight hard to remain price competitive. And we can also see customers are looking for a deal, hence, promotional pressure is, let's say, is clearly a point of attention. But we do believe that we have been able to mitigate this with a good focus on cost control, and that has led to the results of last year.

The Douglas Group is well positioned to further grow as an omnichannel proposition, and we continue to believe that that's the winning model of the future. Still 67% of our sales is stores, 33% is e-com. The E-Com channel will grow a bit more than the store channel, but we do expect that we can grow our position in both channels.

And last but not least, we have had a solid start into the new financial year in the months of October and November. For the month of December, the jury is still out because the next 7 days are the most important days of the year.

And to conclude, we are releasing our guidance for the current financial year, where we believe that our sales will land in the range between EUR 4.65 billion and EUR 4.8 billion. The midpoint of that in percentages is a growth of 3.3%. We expect our adjusted EBITDA to be around 16.5%, and we expect that our leverage by the end of September 2026 is going to be in the range of 2.5% to 3%.

So before we going to move into Q&A, I already told you we have developed 4 commercials. We've shown you the first one. We also want to show you the Christmas one, clearly to motivate you for your hopefully upcoming Douglas or [indiscernible] or Parfumdreams or Niche Beauty Christmas purchase. So let's first have a 35-second look at this commercial, and then we will move into Q&A.

[Presentation]

Okay. So with that, that concludes our, let's say, presentation towards you, and we would now like to give you the opportunity to move to Q&A. And I do see we have a loyal customer, that's Adam. So Adam, you are on top of the list. Why don't you start first?

[Operator Instructions] The first question comes from the line of Adam Cochrane from Deutsche Bank.

Adam, good morning. Go ahead. Operator, we do not hear anything. I don't...

Adam, I think your line is on mute, try to unmute your line. Okay. Ladies and gentlemen, we have lost the line with the questioner, so we can pass the void and go to the next question. So the next question comes from the line of Jurgen Kolb from Kepler Cheuvreux.

Three questions, if I may. First of all, let's talk about the current business that you talked about. I was wondering if you could give us maybe a few more details on your retail media activities, how they developed during the last fiscal year? What do you expect in the future? Moreover, on the supplier bonuses, how have they developed? And what was the impact on the gross profit margin side?

Then on your rather midterm outlook and your idea and project to go towards the Middle East, obviously, several questions here. Would that potentially also include a joint venture or a franchise operation, how you want to go in there? Obviously, which countries do you target first? And one general underlying question. The history of Douglas in the past, many moons back has very often been M&A acquisitions here and there, country or within the group -- within the competition. Is that an opportunity maybe also rather going to the Middle East rather than staying in Europe and making maybe an acquisition to get rid of this quite aggressive price competition that we're facing here? So these are the 3 areas.

Marco, I propose that I will take question 1 and 3, and you will take question 2. So on Retail Media, with -- let's say, our Retail Media business has developed very positively in the last financial year, '24-'25. What does it mean? That means that the sales growth of Retail Media has contributed significantly more than, let's say, the 3.5%, which we've reported as a group. And also the EBITDA contribution of Retail Media has significantly grown. I am not in a position to quantify those numbers. Clearly, I know the numbers, but we are not disclosing them.

We do expect a continuation of the disproportionate faster growth of Retail Media. We are not doing Retail Media in all our countries. Our biggest country by far is currently Germany, but we make a significant step-up, let's say, in France, the Netherlands, Italy, Poland. But we also have countries where we haven't not even started yet. So that means there is still a lot of potential, let's say, going forward.

Since I'm talking, let me also take the third question, Marco. So first of all, just to repeat that in our midterm outlook, we have not included yet any planned investments and upsides coming out of, let's say, our Middle East intention. We have spent already quite some time on the ground, including myself, by the way. And there are many, many well-known retail brands who operate into the Middle East, but almost all of them are doing that together with a partner, with either a franchise partner or a joint venture partner. And we most likely also want to do this with a partner. I say most likely because we have not officially decided it yet, but it's very unlikely that we will do this just by ourselves. And we have not decided what model it will be, whether it will be master franchise or joint venture. And we've also not yet chosen a partner, but we're talking to potential partners. When we talk about the GCC, we are talking about 6 countries. So the United Emirates, Bahrain, Kuwait, Oman, Saudi Arabia. We have not decided in which order we want to enter. But we are targeting the 6 countries together because other than Saudi Arabia, the countries independent would be too small to do one country only. And it is very normal since the language is the same, that brands and retailers are operating across those 6 countries. It is very unlikely that we will open stores or businesses at the same point in time. So there needs to be an order, but that is not yet decided what the order will be.

When you talk about M&A, I have also made that statement, let's say, before. Yes, historically, Douglas has been quite active in the M&A domain, and I would say with mixed results. So we have made a number of acquisitions, which have really created value for the company, like our acquisition of NOCIBE, the acquisition in Italy -- of acquisitions in Italy, the acquisitions which we've done in Bulgaria, but we also had less fortunate choices, especially in the Spanish kind of domain. So it's not that we completely rule out M&A. So if something is in the market, we are taking a look at it. But there are very, very, very few brands, retail brands, which we would be interested in. We would more likely be interested to acquire a number of stores in those markets where we believe that those stores would create a -- basically fill in some white spots. And currently, there are a number of retailers, certainly store-only retailers under severe pressure.

So we are keeping our eyes wide open. But you should not expect, when we talk about CapEx of around EUR 150 million, there is not going to be a lot of that CapEx allocated in the current financial year to, let's say, real M&A. And to pick up 8 or 10 or 12 stores, I don't consider to be real M&A.

So with that, I wanted to go back to Marco to come back on basically the question regarding bonuses.

Yes. Sure. So first of all, let's say, on the impact on a full year basis, our total gross profit margin is down 120 basis points. In this case, let's say, the majority of the delta is attributable to a cash margin decline, which is essentially the result of the margin pressure from, well, mostly price and promo competition that we have been discussing and let's say, less than 50% due to lower supplier bonuses impact. This is slightly bigger in Q4. Why is that? Because our -- typically, our contracts with the suppliers are on a calendar year basis. And therefore, every quarter, we, let's say, adjust our full calendar year sell-in and sellout estimates to properly accrue for the kickbacks that we expect on a full year basis from the suppliers.

And let's say, in Q4, let's say, this had a slightly higher negative impact. So around half of the gross profit margin decline was due to supplier bonuses decline versus last year and half cash profit margin, whereas on a full year basis, slightly more, around 60% was due to cash profit margin decline and less than 40% due to the supply bonuses. I hope this addresses your question.

The next question comes from the line of Joffrey Bellicha Meller from Bank of America.

The first question I have is regarding the gross margin development as you head into fiscal 2026. So are you seeing any improvement or any deterioration of the promotional environment on the back of the solid start to the year that you are seeing? That would be my first question. And on the back of that, what drives your confidence on the EBITDA margin target that you have set for yourself for this year?

And my second set of question is more around the top line components of growth. So you're mentioning a market growth of 2% to 3% in the midterm, and you will be slightly above that. Obviously, beyond the space opportunities and the like-for-like opportunities, I'd like to understand in a bit of a better manner what contribution you will see from pricing, mix and volume within the premium beauty industry? And I'll probably stop here for now.

Okay. Marco, let me take the second question, and I will start with that, and then you take the first question. So first of all, Joffrey, you were referring to a midterm growth expectation of 2% to 3% in the market. I just want to reiterate, we're expecting a growth of 3% to 4% in the midterm in the market. And for the current financial year, it's going to be more likely 3% rather than 4% or around 3% rather than around 4%.

From a pricing perspective, we expect that the premium beauty brands will basically grow along with kind of the general consumer price inflation development, which has significantly normalized over the past, you could say, 1 to 2 years. So if that would be 1% to 2%, then you could say 50% of the growth is volume driven and 50% would be price driven. We could also break down the growth of the market between online and offline because we expect e-com to be a bit more than 3% to 4% and the store network to be a little bit less than 3% to 4%. And we could also break it down into categories. So I'm quite certain that is a question as well.

So in the last financial year, clearly, Fragrance and Hair Care have been the most dynamic categories. So they have been contributing disproportionately more to the sales growth of the company, whereas Skin Care and Color have been, let's say, on the lower end of that. And we actually do expect that Fragrance and Hair Care will continue to, let's say, be above average.

And with that, I wanted to go back to Marco to come back on the gross profit EBITDA question.

Yes. Sure. So thanks, Joffrey, for the question. So we do not expect a material change into our gross profit margins into the future because this is a bit of a result of a, let's say, continued promotional intensity that we see on the market that we plan to counterbalance with, as explained by Sander, the focus on corporate and exclusive brands that typically carry greater loyalty with the customer and, of course, higher margin protection. So basically, the strategy is to protect the margins via this growing sales share to remain competitive on the third-party brands.

At the same time, we are still expanding the network. It means that in a ramp-up phase, of course, stores are adding some fixed costs that are also partially responsible for the slight decline in adjusted EBITDA margin in next year's guidance before, let's say, the full ramp-up of the sales level is reached. And this is a bit the building block. So gross profit margins that we're not seeing as a potential to expand, but a bit of a net effect between different dynamics.

Very helpful. If I may, could I have a follow-up.

Go ahead.

You were mentioning the exclusive brands and you were adding more exclusive brands. Can you give us a little bit of context on any contract duration you may have with these exclusive brands? Or are they in perpetuity?

No. We have a number of -- first of all, we have a kind of -- we make a distinction between what we call group exclusive brands. So these are brands where the group is basically contracting them, and we are selling those brands in almost all our countries. And we have brands where we have exclusivity often for a 1 or 2 countries only. And our focus is predominantly on growing our group exclusive brands. With some of those brands, we have been working together for multiple years.

In most cases, we have basically an annual contract, which we prolong. But brands in the premium beauty industry, you don't build in 1 or 2 years, you build them over a longer time span. So when we commit to new brands like NEST or Drybar or TYPEBEA, there's a clear intention from both sides, us and the brand, to do this for multiple years. And then there will be, let's say, different versions of contracts.

Very clear and extremely helpful.

Let's move to Yashraj Rajani.

I have three, please. So the first one is just on CapEx. So your CapEx guidance for this year seems to be a touch lower than last year. And again, obviously, excluding your GCC expansion, do you think that, that's the right level of CapEx? Or do you think that potentially there is some bit of underinvestment because you want to bring down the leverage potentially, right? So that's the first question.

The second question is just following up on your strategy of exclusivity, what is your current level of sales that happen on full price? And again, what are some of the efforts that you're taking to ensure that you have more and more percentage of sales that happen on full price? I appreciate there's a little bit not in your control with respect to competition, but what are you doing to focus on exclusivity and more full price?

And the last question is, you had fully walked us through how you're thinking about GCC and where you are in the stage of expansion. But maybe just at a big picture level, how are you balancing this decision versus potentially deleveraging and paying dividend? Or do you think that both are completely mutually exclusive?

Okay. Let me ask Marco to answer the first question, and I will handle the second and the third one.

So we do not believe that the next year's level of CapEx represents an underinvestment level. We should really bear in mind that this fiscal year, we have invested significantly into the store network rollout as a big step up, 90 openings this year becoming 74 on a net basis is more than double than last year. And actually, in the last 2, 3 years, we've been touching "between refurbishments, locations and openings," around 10% of our store network. So the rejuvenation is really progressing well. And we have still -- despite being a lower number for next year, but we have still a large number of projects for next year.

Secondly, when also we invest into our supply chain, it's typically done with third-party providers. So it's, let's say, machinery and appliances do not necessarily sit within the CapEx that we have there. But of course, they are ultimately in our profit because they are in our margins. And equally for IT investments, it's, yes, partially under capitalization. But as you may know, the more the world is going into Software-as-a-Service, the more actually there are OpEx investments. That's also why we have an increasing share of IT costs in our P&L. And therefore, we have to see a bit the fuller picture. But this is clearly our view.

Okay. Thank you, Marco. So let me move to the second question. And your question was what percentage of our sales are we doing with full price? That's a simple question, but I don't have one number for you. But I do want to give some context. So first of all, if a brand owner comes to us and they want to launch a new brand, our starting point is that we want to sell the brands against the RRP, the recommended retail price because selective brands often work with recommended retail prices.

And if we are exclusively selling this brand, it is very likely that we sell the majority of the volume of that brand against the RRP because there is no reason to change the price because we don't compete from an everyday perspective. And from a promotional perspective, we want to be very cautious and balanced. That would not mean that we never do a price promotion, but the level of price promotions is a very small portion of that.

If we talk about selective brands like, let's say, CHANEL or DIOR or Armani or Valentino or Kerastase, there are more retailers who are selling that. Hence, there is more price competition. Hence, the likelihood that we cannot sell this standard against the RRP is quite high. So depending on the market, we have a lower, let's say, shelf price, but not necessarily the same shelf price. And also depending on the market, we have a different level of competitive intensity.

So you can also see our, let's say, EBITDA percentages for the different segments which we report. And part of that is being driven by differences in gross profit and a significant portion of this difference in gross profit is, let's say, related to the different levels of promotional intensity. So in different markets, we sell different percentages of our sales against full price. And in order to mitigate that, we are working actively on growing the portion of brands which are unique to Douglas.

Thirdly, on the GCC, today, we are announcing that we are, let's say, considering an entry into the Middle East. We are also announcing that because we want to be careful that we are not creating any, let's say, insider stuff, et cetera. We want to give our people the opportunity to freely talk with suppliers, with landlords and also with potential partners. But I just repeat, there is no approved plan yet. So therefore, I cannot give a 100% clear answer to your question, what would be the implication of this plan on CapEx and what would be the implication of this plan on leverage and maybe on the ability to pay out dividends.

However, I did say earlier that the expansion rate of new store openings in our existing 22 markets is going to slow down. As a result of that, we are already taking a little bit of a step back on CapEx investment for the current financial year, but we do expect a significantly smaller number of new store openings in the outer years, and that would clearly create some space, let's say, from a CapEx perspective. But that hasn't been quantified yet, but hopefully, that gives you a little bit of an indication on it. And once there is an approved plan, clearly, we have a responsibility to communicate the potential implications on, let's say, the midterm outlook, which we are providing. Is that okay for now?

Yes, that's super helpful.

Vandita?

I'll keep my comments brief. First of all, just wondered if you considered any market with the view of the selective beauty retailing -- not beauty, just selective retailing legislation that you benefit from in Europe. Do you think not having that will make any difference as you think about new markets?

Secondly, I don't know if you can answer this, but what level of sales growth do you need to start seeing a reversal in the trend of supplier bonuses? So for example, at the midpoint of your '26 sales around 3%, is that positive for gross margin year-on-year?

Okay. So let me -- those were your questions, Vandita, two questions, right?

Yes.

Okay. So let me take the first question. So first of all, in Europe, we have the very specific situation that there is the opportunity to have selective distribution agreements, and that is also backed up by, you could say, European legislation. And that clearly allows us and allows the brands, but also it helps us to be selective and to remain selective. If that legislation would disappear, that does not mean that you can buy CHANEL or DIOR at every corner of the street. If I walk into a drugstore in the United States, where they don't have selective distribution agreements in the way that we have, let's say, in Europe, I do not see CHANEL or DIOR or Acqua di Parma in the U.S. drugstores. And I was in the Middle East last week in a number of stores, and I was missing a lot of the, let's say, the premium brands, let's say, in more mass market type of environments. Hence, the brands are also able to create selectiveness, let's say, not backed up by a legal framework, basically backed up by a commercial framework because the brands we are focusing on are brands which are basically built on exclusivity. They want to create, you could say, a certain level of scarcity, and it would not be in the interest of those brands to see a massive growth of, let's say, distribution.

Hence, we are happy to have this legislation in Europe. And there is also not an expectation that this legislation will change shortly. But if it would change in the mid or longer term, I don't think that it will fundamentally change, let's say, the dynamics of our category.

With that, I want to ask Marco to take the second question.

Yes. Vandita. So on bonuses. First of all, I would need to clarify that the -- of course, the contracts and the relationship with the suppliers are more, let's say, complex than the single line of the bonuses because we also perform co-marketing activities together. And of course, it's also an agreement on the first-line margin, the first cash margin. And also, there's quite a difference between winners and losers and different brands.

So to your question on the growth that we could expect for the next years, yes, it could very well mean a return to a growth in the bonuses. However, it really depends on the mix, okay? The mix, both of the nature of the brands and the contractual agreements. And overall, therefore, we see it as a balancing element towards the, let's say, the overall broader market pressure.

Also, very often, when we have exclusivity brands, et cetera, they typically work with a higher cash margin and maybe lower kickbacks and bonuses. And therefore, it might also create a small change into this dynamic, if you see what I mean.

Okay. With that, we would like to give Adam another opportunity to try.

Right. Hopefully, I've managed to turn my microphone on. Can you hear me now?

Yes. Loud and clear.

Brilliant. Well, with all that time, I've managed to get four questions you'll be pleased to hear. On the first one, you talked about the market growth of 3% to 4%. And in the midterm, your low to mid-single-digit sales growth, obviously there's a range in there. But if we assume that your sales growth is somewhere within that market sales growth of 3% to 4%, why are you not expecting an outperformance of the market growth over that next, let's say, 3 years? Is it because of the geographic mix within that 3% to 4%, where some markets where your penetration is lower are growing faster and Germany, let's say, might be a bit slower? Or is it the online versus offline? Just a description of why you're not expecting to grow faster than the market.

Secondly, a bit more specific. On your average net working capital, is it being completely -- the reduction being completely driven by the change in supplier funding? Or are you making operational improvements above and beyond just the change in funding?

Thirdly, has there been a performance differential between your sort of premium luxury and your more masstige offering within your stores? And is this something you can do to change the mix in your product portfolio between higher end and lower end, if there is a difference that would be worth addressing?

And fourth, very short term, last year, you saw some quite big moving parts, the way that trading changed in December and into January. Can you just remind us sort of when the step changes in consumer behavior started last year. I think it was from sort of middle of December onwards. But if you could just remind us exactly what happened in, I suppose, your Q1 last year?

Yes, I would propose -- or let me take question 1, 3 and 4, and Marco can take question on net working capital. So I will first take the three questions and then hand over to Marco.

So on the first question, let me keep it brief. We expect the market to grow between 3% and 4% over the next few years. We expect that it will be closer to 3% rather than, let's say to 4%. And the midpoint of our guidance for the current financial year is 3.3%. So you could say that it's basically in line with the market. And it is correct, Adam, that it also implicitly is the consequence of our disproportional big portion of sales in Germany and France, Southern Europe. So Italy, Spain, but also the Adriatic countries are doing more than, let's say, 3% to 4%. But other than in Italy, we have a relatively small position. So the share of Germany and France makes us, you could say, a bit more cautious to a certain extent. That is one.

Secondly, when you talk about premium and masstige, I'm very aware that many retailers are reporting downtrading of customers and acceleration of low-priced brands and acceleration of, let's say, private label sales within their mix. Within our business, that is a bit different. So first of all, the sales share of our private label is relatively small if you compare it to a drugstore or a supermarket, let's say, out there. So the relevance of brands is a lot higher. When you look, for instance, to Fragrance, it's not the case that the lower-priced fragrances are growing faster than the higher-priced fragrances. Actually, on the contrary, the higher the price in terms of positioning, they are doing disproportionately better. So for instance, niche fragrances, which is still a relatively small segment, is growing disproportionately faster. What we do see is that people are sometimes trading to a smaller bottle. So instead of the 100 ml, they buy the 50 ml, but that would still be in the same brand.

And then thirdly, if you look to the masstige brands, so we have, let's say, masstige, you could say, are brands which would sit between EUR 10 and EUR 40 to EUR 50. So a brand like Rituals is doing really well and is growing a lot faster than our total sales. But the brand like the Ordinary, which is also a masstige brand with a low price point, which was really hyped, is under pressure everywhere, not only with Douglas, but also, let's say, outside Douglas.

So there is a mixed picture, but there is no downtrading from premium to masstige. Within the categories and the brands, there are different developments. And then last year, we reported 6.4% growth for the quarter. Do I say that correct? 6.5% -- so last year, we reported 6.5% for the full quarter, which was retrospectively for the full year, actually a very good, I would say, number and significantly higher than in the second, the third and the fourth quarter. And it is correct that October and November, let's say, contributed positively to the 6.5% and that December contributed negatively to the 6.5% in 2 ways, by the way. First of all, the growth in December was lower than 6.5%. And secondly, the weight of December is significantly higher than the weight of the other 2 individual months.

So in October and November, we have cycled our strongest, let's say, months of the past year. And basically, as of now, more or less as of this week, we are starting to cycle a slowdown in last year's number. Hence, the comparison base is softening if you compare, let's say, last year with the current year. And then still, it remains a fact that our most important week, because the last 7 days before Christmas are the most important 7 days and the last 7 days -- today, we've started with day 7. So there is still a lot of what needs to be sold ahead of us. Is that -- okay. No, that's not addressing all your questions. That's hopefully addressing 3 of the 4 questions, one to come from Marco.

Yes. Okay. So working capital, Adam. So first of all, it's all driven by inventory, of course, our working capital because then the relationship with the suppliers includes receivables and payables. Receivables towards customers is marginal because, I mean, essentially, our sales are 100% or so paid on time, let's say, in the cash. Inventory is slightly above last year in absolute number. But in terms of a growing business, it's actually in line in rotation. So we look at the days of inventory, and it's 1 day of improvement, so let's call it stable. And remember, we always measure the average really to avoid, let's say, focus on a single month potential seasonality effect or deviation.

We make efforts on fastening our accounts receivable collection, which is essentially bonuses from the suppliers or co-op and marketing income from the same, which is proving extremely successful in France, for example, and stable in the rest of the group.

And then when we look at the accounts payables as a whole, yes, the answer is yes. I mean the significant majority of the improvement in the, let's say, liability side came from the extension of the supply chain financing, which by reminding it's essentially a payment service that we extend by 60 days of payment, the payments to, let's say, a selected share of our business that drives basically the longer payment terms that we have.

And I must say also in light of, of course, the store network development as well as the opening of warehouses, please always bear in mind that we have a front-loading effect on the working capital from inventory primarily because as we operate 2 parallel supply chains for a few months, of course, we need to build up the inventory on the new warehouse as well. When we open the store, you are essentially purchasing immediately the inventory, but not yet having the sales or the COGS to benchmark it against in the KPIs.

Okay. But just to clear, so you extend the payment days by 60 days, but don't just owe that money to a financial institution instead of a supplier?

Well, it's a service -- it's a payment service that we have from a service provider, which is, by the way, why it's essentially an operating payable, and it goes up and down, let's say, with the cycle of payments. So it's really an operating measure.

[Operator Instructions] Ladies and gentlemen, there are no more questions at this time. So I would now like to turn the conference back over to Sander van der Laan for any closing remarks.

Yes. Thank you, operator. So let me briefly wrap up. We want to thank you all for your attendance. We've concluded a dynamic year '24-'25. The Douglas Group is well positioned for the future. The market environment has changed, but we are, let's say, adjusting for that. Christmas is around the corner. Our purpose is to make life more beautiful. Don't forget to think about your beloved ones and your family. Our stores and our online stores remain to be open to service you with your Christmas purchase. And Merry Christmas, happy holidays and hopefully see and talk to you in the New Year. Hereby, I close the call.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call. Thank you for participating in the conference. You may now disconnect your line. Goodbye.