Fourlis Holdings S.A. (FOYRK) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Fourlis Group conference call and webcast to present and discuss the first half 2026 financial results. We have with us today Mr. Vassilios Fourlis, Chairman; Mr. John Vasilakos, CEO; Ms. Tessy Latsou, Finance Director; and Ms. Elena Pappa, Investor Relations and Corporate Affairs Director. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to management. You may now proceed.

Good afternoon, everyone, and thank you for joining us today. Before we go into the detail of our first half results, I would like to take a few minutes to put our performance into the broader context and more importantly, to explain why we remain confident about the direction of the group. There is no question that retail is currently operating in a challenging environment. Across many markets, consumers remain cautious. Disposable incomes are under pressure and the sector is having to adjust to changing spending patterns, higher operating costs and continuing economic uncertainty. These are not circumstances specific to Greece or to our group. They are affecting retailers and consumer brands internationally. Against this background, our brands continue to demonstrate their strength and relevance to consumers with sales performance that compares favorably with the broader markets in which we operate. This is important because it confirms something fundamental, even in a difficult consumer environment, strong concepts properly executed can continue to gain market share. But our story is not simply about navigating today's market. It is increasingly about positioning Fourlis Group for the opportunities of tomorrow. The first element of this is growth. Over the coming period, a significant number of new locations are expected to become operational across our portfolio. We're expanding the Foot Locker network as well as INTERSPORT selectively, while IKEA has also an important development pipeline. Among these projects is our third large IKEA store in Athens at Ellinikon, a location that we believe has considerable long-term potential as this major new part of the city develops. These openings will progressively expand our addressable market and strengthen the physical presence of our brands. At the same time, however, we are not simply adding stores to the existing Fourlis model. We are changing the model itself. The structural transformation currently underway is designed to create something broader, a technologically advanced retail platform capable of operating multiple retail concepts efficiently across our markets. This is an important distinction. Historically, retail groups have often been organized around individual brands, each supported by its own infrastructure, system and processes. We see an opportunity to create a much more integrated organization one in which technology, logistics, data, digital capabilities and other central functions can increasingly support multiple concepts through a common platform. The strategic logic is straightforward. As the platform grows, we should be able to add new sales and new concepts without having to replicate the entire cost structure behind it. We expect this to improve productivity, create operating leverage, contribute to excellent customer service and finally, translate growth more effectively into profitability. Technology is central to this transformation. A more integrated technology and data infrastructure should allow us to understand our customers better, manage inventory more efficiently, improve the interaction between physical and digital retail and make faster and better informed decisions across the organization. So when we speak about the transformation of Fourlis, we are not referring simply to a cost reduction program or an internal reorganization. We are building a different kind of retail group. Our objective is to combine the advantages of strong international brands with the infrastructure, technology and scale of a common operating platform. And as this platform develops, we believe it can support not only the concepts we operate today, but potentially additional concepts in the near future. This brings me back to the first half results. We should evaluate them against 2 different time horizons. In the short term, we are operating in a demanding retail environment, and we are pleased that our brands are proving resilient and performing well. In the medium term, we believe the more important story is the combination of organic growth, a substantial pipeline of new locations and the structural transformation of the group. The stores we are opening will increase our commercial footprint. That platform we are building should allow us to operate that footprint more efficiently. And the combination of the two should progressively strengthen both the growth and profitability profile of Fourlis. There is still considerable work ahead of us, but we believe we are entering this new phase from a position of strength with leading brands, significant expansion opportunities and a clearer and increasingly scalable operating model. With that introduction, let me now pass the floor to our CEO, John Vasilakos for our first half performance in more detail. Thank you.

Thank you, Vassilios. Good afternoon, and thank you for joining us for Fourlis Group Half 1 2026 results presentation. Today, we will briefly review the group's performance for the first half, the key business developments and the progress of the structural actions currently underway. Half 1 2026 confirms solid commercial momentum. We continue to focus on disciplined execution of the 2026 plan while setting a base for stronger operating leverage from 2027 and onwards, as Mr. Fourlis already described. Let me start with the key messages for the first half. Fourlis Group maintained solid commercial momentum with revenues increasing by 7.6%, supported by continued market share gains, positive like-for-like performance and network expansion across our core retail activities. At the same time, operating profit was affected by inflationary pressures across major operating cost lines, including personnel, property, energy and transportation costs, the particularly challenging market and business environment in Romania, the planned ramp-up of strategic growth investments, including Foot Locker, particularly Foot Locker expansion and Inter IKEA DC start-up costs as well as planned network rationalization actions already announced during the general assembly. Importantly, we are responding by accelerating the implementation of our transformation reorganization plan. The program is now moving into a more execution intense period during the second half of 2026 with structural actions expected to generate more than EUR 9 million of annual recurring benefits from 2027 onwards. In parallel, the announced business disposal transaction of our participation in Sofia South Ring Mall is expected to strengthen our leverage position as the majority of the 49 million cash is planned to reduce net debt, producing also a net gain of EUR 9.3 million, positively contributing profit before tax in full year 2026 numbers. So the key message for half 1 is that commercial momentum remains intact while we are delivering the transformation plan, we announced during the general assembly in June. And most importantly, we are here to reiterate our full year 2026 guidance. Turning to the group's financial performance for the first half. Revenues increased, as I already described by 7.6% year-on-year to EUR 284 million, supported by positive like-for-like performance of 3% year-on-year on a group basis, continued market share gains and network expansion. Gross profit increased to EUR 132.6 million, while gross profit margin stood at a solid 46.7%, reflecting product and category mix, including a planned and already announced stock rationalization and targeted promotional activity. Remember that during the general assembly, I explained in detail why a profit margin of around 46.5% is a viable and sustainable margin for the years to come. At the operating level, EBIT amounted to minus EUR 1.6 million, reflecting seasonality, inflationary pressures across major operating cost lines, as already said, the planned ramp-up costs related to our strategic growth investments such as the new Inter IKEA distribution center and the continued expansion of Foot Locker as well as the planned network rationalization. Last but not least, profitability was influenced by the particularly challenging market and business environment in Romania. Contribution from associates remained strong at EUR 12.8 million, supported by Trade Estates and SSRM. The important point of this slide is that the commercial performance of the group remains solid. The pressure we are seeing is concentrated at the operating cost level. And as announced during the general assembly in June, we are mitigating through tighter cost control and structural actions in the second half, which I will explain in the following slides. On this slide, I want to elaborate on the main factors behind the pressure on operating profitability during the first half. First, according to our plan, we delivered Foot Locker expansion plan and the startup and ramp-up cost of the new Inter IKEA distribution center, which impacted Half 1 results. Second, we faced inflationary pressure across several key operating cost lines, including the annualization of the first-line payroll increases last year. Remember that last year, we had some personnel and payroll increases restricted to the first-line employees given that inflation was there and of course, we had to adapt in order to reduce churn and rotation of our people, which cost significantly higher than the payroll increases. The increase in cost of energy heavily affected by rising fuel prices, warehousing and transportation costs, which unfortunately persist until today and we have assumed for the year to go that the prices will remain relatively high or at the current levels. And of course, inflationary impact on property contracts, especially in Romania, given that the year-to-date inflation, the average inflation rate is close to 7%, and we started the year with around 10% with direct impact on the leasing contracts. Third, Romania remained overall as a challenging market with weak consumer demand, high inflation and continued pressure on margins. Remember, during the general assembly, I described the situation as a perfect storm where people are buying only under a very strong promotional activities. And of course, this affects both the margin, the average retail price and the overall turnover. And finally, we recognized EUR 1.6 million during Half 1 of one-off network rationalization cost, mainly directed in Romanian market, which affected also the Half 1 profitability. It is important to know though that according to our plan, the majority of the 2026 transformation and reorganization cost is expected during the second half of the year already up to now, we have taken a big part of it. And let me now in the following slide, take you through the actions and the progress of this transformation plan, the progress to date and the recurring benefits that we have already secured for '27 and onwards. Announced full year 2026 we have planned approximately EUR 11 million, EUR 10.7 million of one-off transformation reorganization and strategic action costs. Only EUR 1.6 million of those costs were recognized during the first half relating to Intersport network rationalization in Romania. The remaining EUR 9.1 million one-off cost is planned to be incurred during the second half of the year. Up to now, execution, of course, is in progress in line with our plans. And in particular, up today, the voluntary exit scheme what we call in this presentation VES and the platform creation program, which has to do with the centralization of functions like HR, technology, finance, procurement, legal is on track. And we have already assumed close to EUR 3.7 million of costs that we recognized year-to-date and EUR 2.9 million out of the EUR 3.4 million annual recurring benefits already secured. There is some space from EUR 3.7 million to EUR 4.4 million until the end of the year in order to secure all the EUR 3.4 million of the annual recurring benefits till the end of December. So fully on track regarding centralization and going fully on track on securing the benefits for next year. Regarding network rationalization, we are also on track with the total cost up to now at EUR 2.2 million, including 2 INTERSPORT store closures as well as the closure of the IKEA Piraeus store. And of course, we have already secured a significant part of the recurring benefits up to now. Finally, regarding the Holland & Barrett, yesterday evening, we signed the subscription agreement with the shareholder of DrP Group, and we finalized all this process. This transaction secures EUR 2.2 million of annual recurring benefits from 2027 and onwards. So the transformation plan is expected to generate annual recurring benefits of approximately EUR 9.1 million. This is not simply a short-term cost reduction exercise as, Vassilios Fourlis said. These actions are designed to create a leaner and more scalable operating model with stronger cost discipline and improved operating leverage from 2027 and onwards, and we are fully on track to deliver until the end of the year. Let's now look at performance by business unit. Home Furnishing generated revenues of EUR 172.9 million or EUR 173 million, up 3.7%, continuing to outperform the underlying market and gained share across the region. EBIT amounted to EUR 4 million compared to EUR 8.3 million last year, reflecting higher operating costs and the start-up cost of the new Inter IKEA distribution center as well as the normalization of gross margin to a solid and sustainable 46.7%. Sporting Goods remains the group's strongest growth driver with revenues increasing by 14.2% to EUR 109.5 million, supported by Foot Locker expansion and resilient demand across most markets. EBIT was minus EUR 0.7 million, reflecting predominantly the expansion-related cost of Foot Locker as well as the challenging environment in Romania, inflationary, of course, operating costs, the planned stock rationalization and old stock liquidation that we had already announced during the general assembly and the one-off network optimization actions already discussed. So the common theme is that underlying commercial performance remains healthy, while the profitability pressure reflects identifiable cost and market factors that were partially mitigated in the second half of the year, and they are already assumed in our plan and of course, the guided EBIT for the end of the year. Then move to IKEA, execution of our network plan remains on track. During 2026 and up to date, we continue to upgrade the network towards the new generation format. Rhodes was converted successfully from a pick-up and order point to a new generation store and is performing quite well, while the upgrades Plovdiv and Limassol were just completed and we proceed according to the plan. Piraeus store was closed at the end of August as part of the announced network rationalization. It was a loss-making store. And what we saw is that already sales were not lost and were directed 100% to our big store in Athens. These actions support our strategy of bringing IKEA closer to customers, strengthening accessibility and of course, the omnichannel experience while maintaining a disciplined approach to network development. Looking ahead, we continue to see opportunities for additional new generation store near smaller cities from 2027 onwards, while the Ellinikon flagship, as Mr. Fourlis said, remains an important longer-term milestone for 2029. Overall, the focus remains on targeted expansion, customer proximity through geographies and the smaller format and network optimization when there is a need to do it. In sporting goods, we continue to pursue 2 priorities: scaling Foot Locker and optimizing the INTERSPORT network. Foot Locker continues to expand across the region with 7 new stores up to date, strengthening our presence in the regional and building scale. At the same time, we are progressing with the INTERSPORT rationalization plan. 2 stores in Romania were closed and 1 was relocated so -- so far, while further store closures are planned until the end of the year, in line with our previously communicated transformation plan. In parallel, we evaluate several potential geographies for INTERSPORT stores, relocations and renovations, especially in Greece and Bulgaria. Our objective here is clear: continue investing where returns are attractive while addressing structurally underperforming locations to strengthen profitability from 2027 and onwards. Of course, in big retail, this is an ongoing process and we have to understand thus, that this is a hygiene for big retail. Alongside the operational transformation, we have also progressed a number of important strategic actions. First, we announced the sale of our indirect 50% participation in Sofia South Ring Mall for EUR 49.3 million. Following completion, the majority of the proceeds is expected to support net debt reduction, which is very important. The transaction is also expected to generate an estimated EUR 9.3 million one-off net gain that will positively contribute to full year 2026 profit before tax. Regarding Holland & Barrett, as mentioned earlier, yesterday, we signed the subscription agreement with the shareholder of DrP Group. The partners here, as already explained, aims to expand the brand through flexible in-pharmacy retail formats, including shop-in-shop concepts and dedicated merchandising spaces. Finally, the new Inter IKEA distribution center has been completed and entered its start-up phase in July with operations progressively ramping up during the second half of the year. The things are performing quite well there. Inter IKEA is testing the one new WMS system. Things are progressing fast and very successfully. And we believe that until the end of the year, we will reach a significant better utilization and capacity than the initial plan. Together these three actions sharpen our focus on core retail, strengthen financial flexibility and support the development of the group's future operating platform. We continue to balance investment in growth and transformation with disciplined capital allocation and shareholder returns. Capital expenditure amounted to EUR 12 million in the first half, mainly directed towards network expansion, digital transformation, maintenance and the new Inter IKEA distribution center. In July, we paid a dividend of EUR 0.15 per share and initiated the new share buyback program for up to 5% of the company's share capital. At the same time, we proceed to the business disposal transaction of Sofia South Ring Mall for a consideration of EUR 49.3 million with the majority of the proceeds, as already described to support -- we intend to support the net debt reduction. So our priority remains to invest selectively in profitable growth while maintaining a healthy balance sheet and returning value to shareholders. Let's now look at trading after the end of the first half. Commercial momentum remains positive with some headwinds in home furnishing markets. Up to September 5th, Group sales were up approximately 6% year-to-date with home furnishing up around 2% and sporting goods up approximately 12%. It is worth to mention that excluding Romania, which us -- which we all know that's under pressure, the sporting goods sales growth is around 24%. We expect the positive trend in sporting goods to continue till the end of the year, allowing us to gain significant market share, while home furnishing is expected to recover partially through targeted market share gains in the third and most important quarter of the year. Remember, the seasonality in big retail is very much -- is pointing the third quarter as always, both regarding sales and sales opportunity, but also recovery of EBIT margin. Our priorities, so remain disciplined execution, tight cost control and protecting commercial momentum while continuing to address the pressure in Romania and progress with disciplined structural actions already discussed. So we reiterated our full year 2026 guidance. We continue to expect group sales of approximately EUR 645 million and gross profit margin of around 46.5%. As we highlighted at the Annual General Meeting, maintaining a healthy gross margin is an important indicator of the underlying resilience of our business despite the pressure we are seeing in Romania. On operating costs, the approximately EUR 2.5 million inflationary headwinds that we have identified earlier in the year are expected to be largely absorbed through disciplined cost management and actions across the group in the second half. Romania remains a significant source of pressure this year with an estimated full year impact of approximately EUR 5 million as already identified in our general assembly meeting. And we therefore continue to expect EBIT of EUR 15 million to EUR 17 million, including the EUR 10.5 million of nonrecurring transformation and restructuring cost that will be recognized in 2026. Additionally, following the completion of the SSRM business disposal transaction, we expect a one-off gain of EUR 9.3 million in the group PBT and a significant strengthening of our net debt position through the respective EUR 49 million cash inflow. So despite a challenging operating environment, our commercial performance remains resilient. We are absorbing a significant part of the external cost pressure, and we remain on track to deliver our 2026 guidance while completing the actions that support stronger operating leverage from 2027 and onwards. Before we move to the Q&A, a quick reminder regarding our financial calendar for the remainder of the year. Our Investor Day will take place on Tuesday, October 20th, and we have already sent and booking on your calendars, where we will present the group medium-term strategy, 3-year plan actually and financial framework in greater detail. I believe that it's very important to join this Investor Day because there we will present both the progress, the plan and in detail how we will bring the numbers in the 3-year plan and commit to this plan in the years to come. We will then report our 9-month 2026 key financial figures on November 24. We are happy to take your questions. Thank you.

The first question comes from the line of Russell Pointon with Edison Group.

I have a number of questions. I'll do them one by one, if that's okay. First of all, just on the transformation, I think the main point of your presentation is that everything is progressing as you anticipated. I was just wondering if there's anything behind that in terms of better than expected or something that has probably gone a bit slower than expected? That's my first question.

Regarding the transformation, first of all, here, we will discuss whatever affects the centralization and transformation and has to do with the productivity gains, not systems and what we do, which is another big chapter given that we are in a huge technology transformation expecting benefits in 2027 from it. But let's stick to what we presented. First of all, we are fully on track, and I will give you some more numbers. End of August, we concluded the voluntary exit scheme where we had 63 people exiting the organization. And if you remember, we had already announced that we will be very happy with around 80 people till the end of the year. So Phase 1 completed very successfully, and we have a small cycle until the end of the year. And to be honest, it was -- it moved fully on track 1 month earlier than the expectations -- than the assumptions of the budget. There is some saving year-to-go given that this was not assumed for 1 month, but it's not very big. But it's fully on track. Regarding the store closing, we have already closed 2 and we have already agreed on a third. And we are ready to very close after the big negotiations that are taking place at the moment, mainly negotiating the penalties from the early closing of the contract. We are fully on track on that as well. And we expect that until the end of the year, we will have reached not 11, but most probably 10. But as had already explained in the general assembly, this process of renegotiating and closing the nonperforming stores also provides some extra benefits from negotiations and of the rents. And most probably, it will provide some extra benefits until the end of the year, but of course, we will not assume until they are secure. So yes, we are on track and things are performing a little better than the initial plan. Anyhow, we will be ready to understand what the impact of it in the day end of this month. On the other hand, we had a target to complete the sale of the Holland & Barrett 1 month earlier -- it took us 1 more month to bring it, but everything is within the budget. And that's the case regarding the whole thing. Now the second half, up to now, of course, the biggest part of that has been already assumed. Regarding the closings, we have assumed a big part, and we have also take provision for another close to EUR 1 million, which makes altogether this EUR 1.6 million that we have recognized during the first half, we are fully on track.

Going to be the strategic part it looks as though it's slightly delayed a bit. I'd just be interested to find out why that was delayed a little. And on the previous conference call, you did ask questions along the lines of how you foresee the plan for that business going forward in terms of the rollout and will be managed, will you get dividend returns? Are you any closer to giving us a better idea of how that business will progress going?

Look, this business is just starting as we have already described, we have 15%. We have not assumed at the moment any impact on our revenues or dividend because at least for the next 2 years, this is on a ramp-up phase. So I don't want to put anything on the assumptions of the following years and of the next at least 2 years. And whatever positive comes, it will be over and above.

Okay. And then my last question is just on working capital. Working capital was a bit less favorable in the first half, and that seems mostly down to receivables. What was the main driver there, please?

So we expect the working capital to remain well managed until the end of the year. This will be fully supported by lower inventories. So we are on track with this. So the level will be definitely reduced until the end of the year. So the supporting factor is inventory.

If you remember during the general assembly, when I explained what is the variable margin, and I said that the variable margin at least for this period is close to 46.5%. And if things are favorable a little bit better, but not 47% something is because within this year, we had to proceed very carefully till the coming of the new demand forecast replenishment and the rebalance system that we introduced -- we're introducing this year and we'll perform next year. To lower -- to speed up the stock that was slow moving and also liquidate some stock that was not performing at all. So within this margin, we had already assumed in our budget, and we explained in detail in our general assembly that we need to mitigate this and operate with lower stock levels. This is healthy. So that's why you see, of course, this pressure. Another small part of the pressure or a part of the pressure, of course, it was one-off because last year we had some extra revenues coming for the initial startup of the Inter IKEA DC from IKEA. But overall, working capital will be supported from lower stock levels and healthier stock levels and healthy stock as well. So this is very important till the end of the year. And if we do our job correctly, the stock will rise only to support the new stores and we have to operate with lower stock levels in the following years as part of our sales, okay? This is the idea.

Ladies and gentlemen, there are no further audio questions at this time. I will now turn the floor -- pass the floor over to management for any written questions from our webcast participants. Thank you.

The first question comes from Mr. [indiscernible]. On Slide 6, you disclosed that up to date, EUR 3.7 million of the EUR 4.4 million VES & platform cost, and EUR 2.2 million of the EUR 3.9 million network rationalization cost have already been recognized. That is EUR 5.9 million of the EUR 10.7 million against only EUR 1.6 million booked in Half 1. So roughly, EUR 4.3 million has landed in July and August in Q3. If this is right, and taking the midpoint of your EBIT guidance, Q4 would make underlying EBIT of around EUR 16 million to EUR 19 million against EUR 14.9 million in Q4 of 2025, so up 7% to 32%. What drives that? Are some of the recurring benefits already landed in 2026? Or is it the IDC contributing to revenue in Q4?

Yes, good question. First of all, I have to repeat myself, but second half and especially the 4Q is what makes the difference in big retail. If you remember last year, we had a similar discussion. We were heading -- we needed around EUR 25 million in the second half or more, EUR 27 million, if I remember correctly. And the question, is it possible to move that high in the second half? And as I described, it is typical. It's not easy, but if you deliver your basic assumptions, it is achievable. First of all, one thing that makes it safe is that we have assumed this EUR 645 million has to do with the maturity of the stores that we have already added in our network plus organic growth, conservative organic growth of the like-for-like. And the only thing that is a little bit stressed is the home furnishing market, which is not performing overall as a market on a like-for-like basis, very high. It's very -- it's close to 0, I can say, in the market. And we have to move in the following period close to the second half and third quarter close to 3%, which we have already planned. And we have put there all the pressure and all the commercial policies and whatever is needed to go for it within, of course, the gross profit margin constraints of 46.5% on an annual basis, which is something important to maintain. So if we bring the EUR 645 million and a margin of 46.5%, which are at least according to our quite achievable, then we have some savings coming from the execution of the one-off this year that are already assumed. And then we have a lot of cost mitigation actions that we have already started implementing in the second half in order to mitigate inflation pressures across other OpEx lines. So yes, it is difficult, but the numbers that you are saying are correct, and we are going for it. And that's why we say that including the EUR 10.7 million one-off cost, we will deliver EUR 15 million to EUR 17 million of EBIT. And close including the SSRM one-off impact close to EUR 22 million of PBT versus close to EUR 29 million, if I'm correctly -- in 2025. So this is the idea. Sorry, regarding the IDC, IDC this year is, of course, a loss-making business. It is the first start. The volumes are not there. And the exercise is -- has the following assumption. This year, we expect to lose close to EUR 1.7 million or EUR 2 million depending on the costs and the ramp-up of the volumes in 2026. So on a full year basis, the impact is going to be negative and we're going to impact the overall P&L of 2026 with around EUR 2 million. But given the assumed volumes that we have planned along with IKEA in 2027 and 2027, it is the first year that we will breakeven. In the following years, we expect, of course, profits to rise both because of the optimization of the business and the maturity of the model, but also because of the increased volumes coming in. And the business case is that within the first 5 years of the business, we're going to have significant profits coming from the model per se, from the operation per se. But as I described in the general assembly, and I will be quite specific during the Investor Day from 2027 and onwards, we will enjoy not only profits coming from operation, but also synergies because the IDC project is located in Athens and very close to our operations. So during the Investor Day in October, I will give you specific details of what is the size of IDC in the following years, what are the synergies. But for this year, you have to understand that the loss of the particular [ BU ] is around EUR 2 million affecting the EBIT of the group, but already assumed in our P&L.

Moving to the next question again from [indiscernible]. Furnishing like-for-like growth was plus 3% in Q1, plus 1% for Half 1, and 0 year-to-date. So the 3.7% Half 1 sales growth is essentially new space. Two things. First, what is deteriorating in the like-for-like footfall conversion or basket size? And second, what run rate EBIT margin are you targeting for home furnishing given you delivered 7.5% in full year '25 and 2.3% in Half 1 of 2026?

Okay. First of all, it is true that home furnishing faces some headwinds. And overall, the market is stagnant. If you see the overall market most probably is declining, single digit but declining. As I described during the general assembly, the European market is even lower and we are at the top quartile of the top performance in Greece. But reality is there and the market is not growing. We are growing on a non-like-for-like basis. And if we want to grow in the second half and especially in the fourth quarter, we have to gain market share. And this is our plan and what we're planning to do in order to bring back growth. If you try to see the quality of this drop, the quality factors of the drop, in most of the cases, it was basket size. So people are not willing in turbulent periods to invest on renovation and higher ticket products. And this is not only in home furnishing, all the big ticket products, electric and are facing pressure when turbulence is there. And there are some small periods that footfall is not there as well. It is declining. Overall, of course, conversion for us is higher. So we are doing what we have to do. Availability is at the best level of the last 5 years for the -- most probably not only for good reasons, but because of the lower demand. Conversion is higher. People in our stores are performing better. Productivity is better, but we're facing a mix of footfall and basket size. The way forward until things will change are through market share gains. And within 2027, I'm more optimistic. And let me give you a small idea per market, what I mean optimistic. Bulgaria faced a significant pressure on consumption during the first half of the year and even 8 months of the year because of the Euro transition that created a lot of turbulence and people were quite afraid to spend and there was no trust, market trust and market confidence was not there. It is recovered though. And I think that Bulgaria is most probably the most promising for IKEA and home furnishing market in the following months and of course, 2027 and onwards. Cyprus is at a better state and continues to perform this period, supporting Bulgaria and the Greek market. And at the moment, for this year, after many years of growth, Greece was also under pressure and the headwinds that we are facing in the previous months are mainly coming from Greece. And this has to do because of the big pressure on people's disposable income, mainly because of energy and transportation costs. And although IKEA has not risen any price the last 3.5 years, and we have done 2 price drops in this period, in 2024 and even 1 week ago, 300 SKUs, people are seeing their disposable income going down, and they are not willing at the moment to spend at the same pace like before. So market share gaining is the recipe within the limits of protecting our profitability. And we have, as in many periods of this company, a specific task to do in the year to go and 2027, at least for Greece, given that the rest of the markets are quite in a different state.

Moving to the next from [indiscernible]. Can you quantify the costs related to Inter IKEA, which you incurred during Half 1 of 2026? Will the Inter IKEA DC be EBITDA positive this year?

Half 1 specifically EUR 1 million, EUR 1.7 million full year is expected and it is EUR 1.7 million losses for this year. On an EBITDA level.

The next question comes from [indiscernible]. Given Half 1 negative EBIT and full year '26 guidance of EUR 10 million to EUR 17 million, while most of the EUR 10.7 million restructuring charges are still expected to be booked in Half 2. Could you walk us through the bridge to the implied Half 2 performance, particularly in terms of revenue growth, gross margin and cost savings? And one additional question, if I may, regarding the recurring annual benefits targeted from 2027, how much should we expect to translate into incremental EBIT after taking into account underlying cost inflation and any reinvestment in the business?

Look, the first part, I think we have already answered. How much of this we are planning? First of all, whatever we promised, this EUR 9.1 million, we will see it next year. And they have to do with specific actions, centralization, I said, so lower FTE per function. Emphasis of moving the people to the front line and production than keeping them in the functions that we will centralize. And the rest is store closing of underperforming stores. So if you ask me, the only thing that could affect the cost saving could be some salary raises. But this is minor because the FTE reorganization will cover most of this as a percentage. So I don't believe that the particular -- I don't believe I'm sure that the particular actions that we will take this year, we will see the recurring benefit fully next year, and there is no factor that would actually offset this benefit. Inflation, of course, overall is a part of the business. We expect heavy inflation to continue across the markets. On average, if you see all the countries, if we assume 2027, 3.7% in Romania, which is quite optimistic, around 3% in Bulgaria, which again optimistic after the Euro transition and Greece, which they say it's going to be close to 2.3%, but I believe it's going to be close to 3%. We have to expect inflation, but this is part of the equation and has nothing to do with the recurring benefits that we have already assumed.