Lulu Retail Holdings PLC (LULU) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to Lulu's Q4 and Full Year 2024 Results Conference Call on the 11th of February 2025. [Operator Instructions]. So without further ado, I would now like to pass the line to Nidhin Jose, the Director of Investor Relations and Group Company Secretary. Please go ahead, sir.

Thank you. Good afternoon all, and welcome to Lulu Retail's Q4 and FY '24 earnings call. Myself, Nidhin, I am the Investor Relations Officer. And it is my pleasure to be with you today. Thank you for joining us, and our thanks to [indiscernible] for hosting this call. Before we start, I would like to remind you of the disclaimer, which can be found on the Slide 2 of our presentation. We will start with a presentation by management, focused on our financial and operational highlights for '24 before opening the call to your questions. I will now pass to our CEO, Mr. Saifuddin Rupawala, who will be followed by our CFO, Mr. Prasad. Over to you, Saif. Thank you.

Thank you, Nidhin, and good afternoon to everyone. I would like to start by highlighting that Lulu is proud to be #1 pan-GCC full-line retailer, holding market leading position across the key markets across the GCC. We are #1 in Bahrain, Kuwait, Qatar, Oman and KSA, operating a total of 250 stores in the region. The past year has been transformative for Lulu Retail. Marked by our successful IPO on ADX and strong business growth. We have delivered solid performance in FY 2024, maintaining strong profitability and announcing our maiden dividend in line with our policy. Operationally, we continued to execute our growth strategy, expanding to 250 stores with 21 new openings in 2024, including 9 in Q4. Private label remained robust now contributing 30% of our retail revenue. Our Happiness and Loyalty program has grown from 2 million to 5.5 million members, while our omnichannel strategy continues to gain momentum with e-commerce scales rise 70% year-on-year, now making up to 4.5% of total retail sale. As previously mentioned, 2024 was a period of strong revenue and EBITDA performance. The revenue reached $7.6 billion, a 4.7% improvement on prior year, driven by higher footfall and solid like-for-like sales. EBITDA increased by 4.4% with a stable margin of 10.32% as the improvement in gross margin was offset by these modification in KSA and Qatar, which we will address later in the presentation. Let's now consider the highlights within our retail operation. Expanding our store network remains a key pillar of our growth strategy. By the end of year 2024, Lulu operates 250 stores across 1.3 million square meters of selling space with 21 new openings, including 9 in Q4. Private label sales continues to grow, now contributing 29.6% of our retail revenue, reflecting strong performance of higher margin offering. Our Happiness and Loyalty program has reached 5.5 million member is now fully rolled out across GCC, enhanced customer engagement. Our e-commerce platform continues to gain strong traction. Sales reached USD 326 million in the year 2024, up to 70% year-on-year growth now accounting of 4.5% of total retail revenue. This reflects 20 bps increase from our 9-month period and 180 bps improvement for the year -- from the year 2023. As previously mentioned, Lulu is pan-GCC #1 retailer backed by strong regional foundation with #1 position in Bahrain, Kuwait, Qatar, Oman and KSA. We are fastest-growing retailer in the region with UAE and KSA as key growth market. In Saudi, we are fastest-growing player of scale alongside other key markets, as previously mentioned. Our strong regional presence is reinforced by a growing omnichannel network, supported by key partnership with Amazon, Talabat, HungerStation and Snoonu. Lulu operates 250 stores in 3 formats, 117 hypermarkets, 109 express stores and 23 Mini Marts. Notably, we welcomed over 300,000 daily visitors across our different platforms. We continue to execute our growth strategy built in 4 key pillars: enhancing our store network, LFL sales grew 2.3% year-on-year, driven by higher footfall, expanding our footprint 70% of the new stores in the year 2024 were Express and Mini Marts aligned with our rollout strategy while 33% follow an asset-light model. Driving efficiency. Operational improvement led to a 118 bps EBITDA margin expansion post lease expenses. Unlocking revenue upset, growth in private label and Loyalty program with Q-commerce set to launch and retail media opportunity under evaluation. Our strong FY 2024 performance highlighted the effectiveness of our strategy and operating model. I will now hand over to Mr. Prasad, who will present financial performance in the period and in more detail.

Thank you, Saifi, and hello, everyone. Let me run you through our robust financial performance, starting with the revenue. Revenue in Q4 increased by 1.8 percentage to USD 1.9 billion with FY '24 up by 4.7 percentage reaching USD 7.6 billion. Like-for-like sales grew 2.3 percentage year-on-year in FY '24, driven by a higher footfall and an optimized product mix. We had strong growth across key categories with the fresh foods up 4.8 percentage in Q4 and 10.3 percentage for the full year. E-commerce grew by 40.9 percentage in Q4 and a significant 70 percentage in the full year, supported by partnerships with Amazon and Talabat along with continued investments in our own platform. Private Label now contributes 29.6 percentage of retail revenue, an increase of 110 basis points over FY '23. Lulu now operate 250 stores across diverse formats with 21 new openings in 2024, including 9 in Q4. 70 percentage of the new stores were express and mini-markets aligning with our asset-light strategy. Key milestone in 2024 was the opening of our 250th store in Makkah, Saudi Arabia. Expansion remains focused on high-growth markets, particularly the UAE and KSA, where strong opportunities continue to emerge. New stores play a crucial role in reinforcing our market position and driving long-term growth. Let us now consider our sales performance by geography. The UAE continued to perform strongly, both in Q4 and on a full year basis, delivering strong like-for-like revenue growth of 4.1 percentage. The Kingdom of Saudi Arabia remains a key market with revenue increasing by 5.5 percentage, fueled by an improvement in our fresh food offering. Oman delivered strong revenue growth of 4.5 percentage in FY '24, supported by the region's strong private-level offerings and import strategy to attract new customers. Qatar saw a stable revenue performance in both Q4 and FY '24, supported by year-end promotional sales growth. Kuwait saw revenue growth by 4.1 percentage in 2024, supported by a strong growth in the region's e-commerce and aggregator partnerships offering. Other operating segments, which is mainly made up of retail operations in Bahrain, and 19 on-the-ground sourcing centers. The Bahrain retail operations performed strongly with revenue increasing by 7.8 percentage. Let us now take a look at our profitability over the period. In 2024, gross profit grew 5.4% year-on-year to USD 1.8 billion driven by operational efficiencies and a higher contribution from private label products. EBITDA rose 4.4 percentage year-on-year to USD 786 million with 10.3 (sic) [10.32] percentage margin, stable year-on-year following gross margin improvement despite lease modification, which will be discussed shortly. Net profit from continuing operations increased 12.6% year-on-year to USD 216 million with margin expanding 20 basis points to 2.8 percentage supported by improved earnings before interest and tax margins. Let us now consider each of these in more details. Gross profit in FY '24, increased by 5.4 percentage to USD 1.8 billion (sic) [USD 1.7 billion] with margins 23.2 percentage, a 20 basis points improvement compared to 2023. In Q4, this increased by 2 percentage to USD 443 million with margins stable. The 20 basis points margin expansion in FY '24 was driven by an improved product mix, higher-margin category growth and private label expansion. Private label contribution increased 110 basis points year-on-year, now representing 29.6 percentage of retail revenue with diverse range spanning fresh food, consumer packaged goods and lifestyle products. Moving to EBITDA. EBITDA reached USD 786 million, up 4.4% year-on-year with a robust margin of 10.32 percentage stable year-on-year. Gross margin expansion in the period was slightly offset by higher operating expenses in Qatar and KSA following lease these modifications. On a lease-adjusted basis, EBITDA with margins expanded by 118 basis point to 6.3 percentage, driven by operating leverage from mature stores and ongoing efficiency improvements. These lease modifications effective from early 2024, shifted lease cost to operating expenses rather than depreciation on right-of-use assets and interest on lease liabilities. These impacts are expected to normalize in 2025. Let's now consider our net profit performance. Net profit from continuing operations grew 12.6 percentage year-on-year in 2024 with net margin improving by 20 basis points to 2.8 percentage. Margin expansion was driven by higher operating profit and a strong earnings before interest and tax performance. Q4 net profit was impacted by slower revenue growth and interest charges to a slight increase in working capital debt. Let's now review our balance sheet and cash flow position. Capital expenditures totaled USD 137 million, representing 1.8 percentage of sales, down from 2.1 percentage in 2023, reflecting our shift to an asset-light model. Cash flow, excluding discontinued operations reached USD 650 million in FY '21 with a strong cash conversion ratio of 82.6 percentage, up 245 basis points year-on-year. Our solid balance sheet positions us well for future investment in profitable growth. Net debt stood at USD 2.5 billion, with net debt/EBITDA at 3.2 percentage on an IFRS-16 basis, excluding leases, net debt/EBITDA improved to 1.3x in December 2024 from 1.4x in the 9 months period, maintaining an attractive new raise profile for continued investments. I will now hand back you to Saifi for the concluding remarks.

Thank you, Prasad. To conclude, 2024 was a significant player for Lulu, a key milestone, including our successful listing on ADX. This attracted over 80,000 retail investors. Strong growth in existing stores, high customer engagement and expansion of private label and e-commerce. Revenue and EBITDA growth driven by new store opening, private label and e-commerce expansion. Maiden dividend of USD 84,000, [$0.82 or 3 fils per share], representing 85% of the semiannual distributor profit after tax from continuing operation pending Board approval. With strong 2024 results, we reiterate our medium-term outlook in reinforcing our position as a growth focus, customer-centric market leader. We are proud to be a market leader across the GCC region with leading market position across most of the markets in which we operate. We now welcome your questions in Q&A session.

[Operator Instructions] Our first question comes from [ Abdulla Al Buraidi ] from Ashmore.

I have 2 questions. Regarding the revenue, on revenue, we have around 10% higher store counts. I understand that on area basis, it is lower because of mostly it was Express stores, but we have almost a flat revenue growth year-over-year and quarter-over-quarter, despite usually the fourth quarter being strong on a seasonal basis most of the countries that you're operating in. So it is a bit weird either year-over-year, looking at the stores opening and quarter-over-quarter, looking at the normal seasonality that the business has. On margin-wise, we have increased private labels. We have increased the fresh items and increased top line for the whole year, which usually comes with a higher rebate and a higher margin, nonetheless with having a decline in gross margin. I'm not talking about the EBITDA margin or the operational leases adjustment. I'm talking about the gross level. For the fourth quarter, we are almost having a decline and the flat quarter-over-quarter despite big part of rebates happening in the fourth quarter. If you could shed some light on these 2 factors, please?

So as far as talking about my revenue growth, we already mentioned that revenue growth is 4.7% against year 2024 -- in the year 2024, it's seen over there. In the year 2000 -- growth is there for 4.7%. And talking about EBITDA and gross margin also, there also we see growth. Even my gross margin has grown and even EBITDA is flat, of course, EBITDA flat. Of course, the reason -- one of the reasons as we mentioned earlier also, my fourth quarter was -- in fourth quarter, my business was flat. The reason -- because -- it was a little slow because of the -- the reason was some of the market did not do as well as expected. And nevertheless, even in the fourth quarter, we had opening of our stores and due to the external reason that was also affected. So we could open the stores, but probably at the end of the year. So these are the -- generally, these are the effects. But I would like to give a note over here that our -- what we have achieved is our bottom line. We have almost achieved our bottom line. And we are -- we were sticking to that quality business only. So that has definitely helped us over there.

So adding to Saifi, on this gross margin, we improved 20 basis points even with all this discounts promotions. So we could manage our margins with our suppliers, with our -- when we pushed some of this inflation support to the customers. So we could manage our growth in our gross margin by 20 basis points.

Regarding the growth of 4.7%, I was talking about the full year, not -- sorry, the fourth quarter, not the full year. For the full year, the guidance at the IPO was 10%, we achieved lower than half of that. And for the quarter, we're only having 2% growth in the top line. You've spoken about some markets not growing as they should. Talking about Saudi, we're having only 1 million increase quarter-over-quarter on top line despite, I mean, 7 stores addition and the ramp-up of many stores that happened already. So would you say that it is basically a market driven, all of it?

So if start by seeing or, I agree with you that fourth quarter was like my growth was 1.8%. As I mentioned earlier, it was because of the softer sales across -- as I mentioned, softer sales in some of the countries. But nevertheless, our performance -- key performance, as I said, I have achieved all my key performance when it comes to bottom line, EBITDA and gross margin that I have got growth over there. Even my LFL growth for the year is 2.3%. And specifically, if you are talking about Saudi, Saudi as we say is a growth market for us. And I've got a limited penetration as far as Saudi is concerned. So what we are going -- we are going forward with more penetration in the Saudi market. And we are confident about Saudi that we will achieve whatever guidance we have given.

Okay. Just one last question, and sorry for taking much of time. Have you changed the rebate accounting methodology because -- and the last 2 quarters, we're seeing a margin expansion, a good margin expansion. But we are seeing a reverse trend in this quarter?

See for us, margin expansion is happening across all quarters. But as we mentioned, our Q4 performance was soft across all the regions. That is why we are not seeing any growth in margin, but margin was stable in the fourth quarter compared to 2023.

So we were performing...

Correct.

We were outperforming up to 9 months period of the market. But for the Q4, we are having softer business, softer growth across all the operating countries.

So no change in rebate accounting methodology?

No, no change in rebate...

Okay. Thank you. Our next question comes from [Ebrahim Kazim from Damos] Capital.

Yes. My question has been answered.

Our next question comes from [Piotr] from Verition Fund Management. Could you please share the assumptions underpinning the 2024 guidance and which market has driven the miss?

See, our guidance was based on our high-growth market like KSA and UAE predominantly. KSA we guided mid-teen growth, but we are achieving this growth up to 9 months period. So post that, because of the softer sales, we missed the guidance in KSA, and we achieved 5.5 percentage of growth in KSA. And we are talking about the UAE, we guided to 9 percentage growth, and we achieved 5.8%. This is mainly because of the Q4 performance. However, we improved our margins, which is visible through our post lease EBITDA, which increased by 118 basis points for the year.

Thank you. Our next question comes from Karim Abbas from Franklin Templeton.

I just want to kind of follow up on the questions that have proceeded mine. You have -- the stock IPO-ed in November at the time the guidance was for -- you mentioned the 8% to 10%. How can something change so dramatically in so many countries in such a short period of time? Softer sales caused lower revenues, sure. But what caused the softer sales in Saudi, in Kuwait and so many of your markets? I'm not clear on the reasoning there.

So to us, it's a one-off event. When we are talking about the softer sales in the third quarter of -- fourth quarter of 2024, to us, it's a one-off event, which we see. But nevertheless, when we look at '25 we are looking towards a strong -- a strong compared as far as 2025 is concerned.

Okay. That's helpful. And I appreciate that you're hoping for a better 2025. But it's not -- doesn't give us a lot of confidence when we can't see the underlying reasons for this, as you call it, the one-off in Q4. So was it lower footfall, was it lower basket size? Like what did you see in Q4 that has led to this impact in several markets?

As I said earlier also, sir, we were looking to achieve quality. We wanted to achieve bottom line. So we worked towards bottom line. I have achieved most of my figures, be it my bottom line, be it my EBITDA ratio, be it my GP there all I've achieved, most of it I have achieved. So we were targeting that only. Of course, definitely footfall has increased. If I may say that even currently, my Happiness card, which I have achieved, which I told you earlier in my presentation, from $2 million to $5.5 million during the year -- during this year. It was -- and it was in very short term -- it was to -- my Loyalty card was fully launched in the month of August. From there, we have achieved this much in the last 4, 5 months. So this is quite an appreciating thing, and this can be seen in the year 2025. Because once I get this customer, I can have targeted promotion -- targeted promotion for them and to help them on -- to increase the basket size also. But nevertheless, as I said, we are #1 pan-GCC retailer. We are serving over 600,000 customer every day. And for me, it looks -- for me, 2025 looks very exciting.

Okay. That's very helpful. Last point, you mentioned in Kuwait, lower department store sales as a reason for some of the weakness. Is that something different or just the same point in terms of seeking quality?

Yes, sir, that's always remain. That is always there. But of course, when we are talking about department store also, we should not forget that 40% of my business comes from nonfood area. So we are coming back strongly in those areas also.

Our next question comes from [Shahrukh Saleem] from Mashreq Capital.

I was just struggling to understand this one part, which has already been asked. You mentioned that you focused on bottom line this quarter. And you also mentioned there are some one factors playing their part in this miss for 4Q. So how do you expect that to change going forward? Are you going to change your focus from -- away from bottom line or what exactly are these one-off factors, which you do not foresee them have taking place again in 2025? Just some light on this.

As I mentioned to you, our delay was there due to reasons in fourth quarter. These stores which are opened in last quarter and all, we will see a ramp-up in that business also. I did mention to you earlier about my Loyalty card also. So this all will go into ramp up. This all is going to bring in business for me in the year 2025, which we see -- which we see it in our business.

And what caused the delay?

So delays actually -- these are the external reasons. Some one of the other reasons are there when we want to open the store. So which was -- it's not happening likely, but it happens in the business. But it moves like when my fourth quarter, my September opening moves to November and all. This all has happened because of the external -- we need certain approvals and mainly -- let me put it broadly as an external region.

Okay. Okay. And would you shed some light that should we continue with your guidance of 5% to 7% at the time of the IPO, the medium term guidance which you gave? Or should we be conservative there for next year?

So we are confident about achieving our long -- short-term guidance of 5 to 7 percentage. We are sticking on with that.

Our next question is from Adnan from Jadwa Investments. What are the main -- what were the main reasons behind the weak 4Q sales growth? Which markets were weaker than your expectations? Given the results achieved in 2024, does the management feel the need to revise the guidance for the future for margins and LFL growth?

So our Q4 performance was slow down in almost all the markets, especially in Kuwait and Qatar. So we consider this as a temporary scenario for us, and we hope our 2025 performance will be better as our CEO already mentioned with the new stores whatever opened in 2024, we'll be getting more business, and we are adding 20 more stores in 2025. And we expect our guidance to be intact, and we are confident about our guidance.

[Operator Instructions]. So our next question is from Elena Jouronova from JPMorgan.

So I have a few questions, please. I couldn't actually understand what your price policy has been in Saudi in Q4? Have you become a bit more promotional price aggressive for the opposite? Just considering your comments that you were trying to focus on the net profit last quarter.

Madam, as I told earlier also, of course, markets are competitive. We are in a competitive market. But we have -- our margins and all are intact. We have not given up on our margins and all. In spite of that, we have improved into our margins or either as far as EBITDA is concerned, we were flat as far as EBITDA. So that's -- we have not given up into the margin. Yes, I agree with you, markets are competitive, but we have lived to -- because, see, let me take you back. I have got a very strong backward integration. I import really from 85 countries. So this all gives me advantage. I've got a very strong distributing center network in all GCC. So this all is giving me advantage to be on the strategy and continuous availability of the product and to secure my margin.

I'm just wondering that considering the landscape in Saudi, which is becoming very price competitive, where the counters are currently growing and taking share and where online is booming, is that really long term the right strategy you're comfortable with to be focusing more on margin preservation rather than investing that in order to solidify your price competitiveness?

See, madam, we are always -- we have been always -- we are in the market for the last 5 decades. And we are serving customers from value to premium. So discounter, they are a segment operator only, but we are full line retailers. So we are comparable with full line retail only, and discounters will be -- they will be there with the limited SKUs in the -- on the shelves and all. But nevertheless, I've got -- as we said earlier, I've got very strong private label also. That helps me to serve all kind of customers, be it from value to premium. And most important for me, in Saudi, is to penetrate the market. The more penetration I have in the market, be it Tier 1 or Tier 2 market, we will be able to come back over there, in Saudi Arabia.

Adding to Saifi, actually, in the policy, as you are aware, we are a pan-GCC player. So our strategy for each country is different. Even though at the group level, we are having a margin protection measures. In country-wise, we may differ depending on the market conditions. In case of -- particularly in case of Saudi, we may not have the same strategy throughout the country. We may have different strategy across each region. For example, if we are going for Tier 2 cities, we may have different pricing policies while versus if we are going for a Tier 1 city. So I think it depends on case-to-case basis. In Saudi, we are well aware of the competitive pressure, and we are taking all the measures to counter. Prasad would you like to add?

So we are also investing our own online platform. So we are also aggressively moving towards that as well.

Before I ask about online. The food versus nonfood, can you give us some comments about how your nonfood category has performed versus food category on like-for-like sales growth? I'm, to be honest, interested more about Saudi, but you can comment for Saudi and for the business overall.

For us, food represents 60 percentage of business and nonfood 40 percentage of business. So our -- so we are in line with this percentage of growth across this food and nonfood.

If I may add, look, our supermarket and fresh food are core to our business and they represent a signification portion. They have been growing -- fresh food has been growing. When it comes to other items, departments store, et cetera, they have also been going. We saw strong growth in our [TCG] department during the year. In our department stores, because of price concept of the customers, we are also pricing our products or having differentiated strategy to grow our department business as well. So the 40% of our business is also growing. We expect that to be a key contributor to our revenues going ahead as well.

Our next question is from Michel Salameh from Citi.

I have a question on the gross gain. Was there any restatement done for Q4, Q3 because the implied numbers that we have from the published statements kind of gives us a higher profit number, for the quarter only?

So there are some reclassifications, it's not a restatement reclassification. But our full year, we are having 23% margin and that will improve to 23.2 percentage. So at a group -- at year end, there is no impact of that.

And just to add on top of that, if you look at our Q4 EBITDA, you can see -- on a lease adjusted Q4 EBITDA, you would see there is a 111 basis point improvement, so -- which shows a strong operational performance, which we have been speaking about earlier.

And with that EBITDA improvement, what drove net income to actually decline by 12% year-on-year?

See we had -- you are talking about Q4. So we had a one-off lease modification income of the $1 million in 2023. So with that, as we already mentioned, our growth was only 1.8% to that extent, we are having a slight decline in our net profit for Q4 '24. But for the full year, we are -- our net profit margin improved by 20 basis point.

Yes, what caused that decline? What actually increased leases, finance expenses?

Here, our finance cost has increased a little bit because of our work capital. So that's a major...

Okay. And another question, why did the other income decline by around 25% in Q4 alone year-on-year? So other income is usually the rebates and supplier support. Is that correct?

Rebates and supplier support is part of our gross profit. So gross profit reached 23.4 percentage. So we don't expect -- there is no decrease in that.

If I -- just to add on top of that...

Nothing operating it...

Yes, if I may, complete. So other income, there was a gain on lease modification with $31 million, which was accounted for in Q4 was accounted in other income. So that's the reason...

Our next question comes from Jonathan Milan from Waha Capital. Have you seen signs of improved growth so far in 2025?

Sorry, can you repeat the question? We missed that.

Have you seen signs of improved growth so far in 2025?

Yes, of course, we are seeing it. As I mentioned earlier also, see, our stores being -- as the stores which were opened in the end of 2024, or our -- my -- this Happiness card, Loyalty card, customers and all, with all these things, we see growth in the year 2025.

[Operator Instructions] Our next question comes from Artem from Roemer Capital.

Actually, I have a question regarding your e-commerce segment. You had the strong growth in online sales. And could you please compare your 2 largest markets, UAE and KSA, how do growth rates and online sales penetration differ in these markets? And could you highlight any specifics on how KSA differs from UAE in terms of developing a digital platform? That's my question.

If I may take that question. If you -- from an e-commerce perspective, we have been growing, e-commerce has been pivotal to our growth. We grew at 70% year-on-year for the full year for the group. If you compare UAE, UAE our penetration and overall, our presentation is around 4.5%, UAE is somewhere around between 4% to 5%, which is in line with our overall e-commerce sales penetration. Similarly, for KSA. KSA is slightly lower than the group's sales penetration, but we are investing heavily and we understand that e-commerce is going to be to drive and then hence, we expect growth coming from e-commerce also in KSA.

Okay. Got it. But this growth actually is it driven by your in-house capacity or you have partnership, for instance, you mentioned Talabat and in KSA, what is your strategy?

We have -- so our partnership with aggregators is a part of our overall strategy. So both in-house, our platforms and aggregators from -- our sales growth is mixed. It's coming from both of these channels.

Our next question comes from Martina from Goldbach Group.

I just wanted to know if there were some store closures in 2024 because I can only see net store addition of 17 stores. So just wanted to make sure that there were 4 closures and what was the reason for that, please?

So we closed to 2 stores in KSA, 2 stores in UAE. This was mainly a small Express and Mini Market format. So this we closed because this was for a shorter period, and we closed that. This was closed before H1 '24.

And...

Sorry, these are opportunistically open to capture a local catchment. And once that was done, we capitalize on that temporary footfall that came up.

Great. So should we expect any more closures or not?

No, no, we are not expecting any closures in 2025.

[Operator Instructions] We have a question from Karim from Franklin Templeton. Do you have a range for what the blended effective tax rate will be in 2025?

So we expect this as per our guidance 12 percentage to 13 percentage effective tax rate. That would be our tax rate -- effective tax rate for 2025 also. This pillar 2 will not be effective in 2025, but 2026, we need to see what will be the impact of that in 2026.

Okay. Thank you. Perhaps I can hand it back to the Lulu team for closing remarks. Thank you, everyone, who has sent questions.

Thank you, all of you. I would like to conclude by thanking all the analysts and investors for taking the time out to attend today's earnings call today. We would like to reiterate the strength of the business and the operating model and our faith in a market-leading position. We continue to be #1 pan-GCC full-line retailer and intend to keep gaining market share. We remain committed to the interest of our shareholders. Thank you all. Thank you for attending today's call.

That concludes the call for today. Thank you, and have a nice day.