Mavi Giyim Sanayi ve Ticaret A.S. (MAVI) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Mavi Giyim regarding the financial results for the third quarter of 2022. Our CEO, Cüneyt Yavuz, will be projecting the results follow for a Q&A session. We would like to inform you that this presentation is being recorded, and we timely ask you to keep your microphone for muted throughout the presentation. Now I will leave the floor to Cüneyt Yavuz...

Thank you, Doug. Hello, everyone. Welcome to our webcast for the financial results of the third quarter of 2022. We are happy to announce another strong quarter with global sales growing 136% and earnings increasing. As you know, the third quarter is the start of our fall-winter season, and it is our strongest quarter seasonally, including back-to-school sales. 143% growth in Turkey retail sales on top of a very high base highlights of well-executed collection supported by loyal Mavishoppers. Demand remained robust throughout the quarter amid ongoing high inflation in Turkey. Sales growth was driven both by price and volume. Almost all product categories grew in a number of pieces in Turkey. During this season, we launched the Serena Mavi icon collection, offering the latest women trends and the Mavi Black and to collections with Coach offering premium men products. On the other hand, Freedom of space with Mavi collaboration drove the acquisition of young and new customers. In addition, we continue to take up greater placing more drops and acquire new customers with new product categories through Mavi protect premium outerwear and activewear collections. We continue to expand our product categories and expand our customer reach with relevant and successful collaborations while maintaining strong brand communication, helping Mavi grow in non-denim lifestyle categories, especially with a focus on growing women's share. In our international operations, we started witnessing macro-driven demand weakness, especially in the European market. Nevertheless, international sales recorded positive constant currency growth in the third quarter. Online sales also picked up momentum and grew 97% in Turkey and 108% globally in Q3 2022. Positive trading environment allowed for high sell-through rates, which continue to help offset significant product cost pressures. On the other hand, as we have been iterating since the beginning of the year, the gross margin level started to normalize in the second half as inflationary product cost began kicking in. We are now witnessing this normalization in all our markets. As always, dynamic and adaptive supply chain management, efficient product planning and inventory management are the key elements for our continued success. We continue our investments on brand and customers, and we are happy to share that we acquired 765,000 new customers in 2022, in line with our pre-pandemic target of acquiring 1 million new customers every year. On the other hand, we continue to integrate sustainability into our coput culture, vision and business practices, and we are designing innovative products in line with our old Blue strategy. Our natural die collection that was launched globally this fall was rewarded as the best sustainable collection at the Rivet Awards, bringing this title to Mavi for the fourth time. We also launched the Mavi Hampden collection this fall, our most sustainable product to date. I am pleased to share that as a result of our sustainability efforts, we recently became the only apparel brand to be included in the best sustainable T25 Index, which was created this November, comprising of high sustainability performance, high market capitalization, and market value companies. I am proud of my whole team for fully embracing and driving forward our sustainability agenda. Now let's look at the key highlights for the period. Moving on to Slide 3. Our consolidated sales as of the first 9 months of 2022 realized that EUR 7.325 billion, growing 130% versus same period last year. Turkey retail sales grew 146% and Turkey online sales grew 71%. Our EBITDA growing 2.5x year-on-year, realized TRY 1,860 billion, resulting in an EBITDA margin of 25.4%. We continue to deliver increasing quarterly earnings. The net income for 9 months 2022 is ILS 1.58 billion. Our balance sheet net cash position increased 83% versus year-end to SEK 1.134 million as of the end of October. The total number of mono-brand stores globally, including franchisees, reached 459. Let's move to Slide 4 to review our channel performance. With the retail channel gaining significant pace this year, total revenue consists of 60% -- 66% retail, 24% wholesale, and 10% e-commerce sales as of 9 months, fueled by the robust performance of Turkey retail, 83% of total consolidated revenue was generated in Turkey. The inflationary environment continues to drive consumers to shop. And as Mavi, we are making sure we have the newness and variety at the right price to respond to this demand and remain consumers brand of choice. As a result, our sales in Turkey grew 138% in quarter 3. All channels contributed to the strong growth with retail growing 143%. -- wholesale business, mainly comprising of franchise stores growing 135% and e-commerce growing 97% in the quarter. As of 9 months, the growth in Turkey is 132%. In the face of the global macroeconomic conditions, we started witnessing some slowdown in international demand, mostly in Europe, and we expect it to continue into the following quarters. Nevertheless, total international revenue grew 8% in constant currency and 126% in TL terms in the third quarter compared to the same period last year. On Slide 5, we start to focus on Turkey retail business. Retail will continue to be at the heart of our growth strategy. Although there is a shortage of available new space in Turkey due to the slowdown of construction in the recent years, -- we continue to expand current stores in square meters, while constantly taking new actions to make sure that consumers have a great shopping experience. In the first 9 months of the year, we opened 5 new stores, closed 3 stores while expanding 11 stores in Turkey. As of October end, we have 329 own operated stores, totaling 167,300 square meters of selling space in Turkey with an average store size of 509 square meters. On Slide 6, let's elaborate on the like-for-like store performance in Q3 2022. In quarter 3, traffic in our stores was 19% higher than the same period last year, which was already a very strong period. Same-store sales grew 140% this quarter with number of transactions increasing 19% and basket size growing 101%. Although there are significant price increases due to the inflation in environment, there was still 17% volume growth in the quarter. We believe these figures to be better than industry average and take it as a testament of Mavi's success in product, pricing and branding strategies. Moving on to Slide 7 to review category-based developments in Turkey retail we are happy to report strong growth across our product categories in the 9 months. All categories delivered significant growth in a number of pieces. We are constantly following changing consumer preferences and enriching our product range, offering newness, variety, and innovation in response. Our dealing category grew 135% year-on-year, now constituting 40% of total retail sales in Turkey as of 9 months. The net business, including our growing T shorts, or short and Jersey categories, is now 28% of our total Turkey retail sales and continue to deliver robust performance growing 162%. I would like to open up [indiscernible]to note that our Mavi logo business is one of the main actors in the success of this category and is also a great traffic driver feeding all other categories. Our rise category, non-denim bottoms grew 166%, constituting 6% of our total Turkey retail sales. Short sales is recovering from the pandemic disruption, growing 151% and making up 11% of our total Turkey retail revenue. Jackets seasonally being a fall/winter product grew significant this quarter, bringing the total growth in the category to 155% and the share in total sales to 7%. Accessories grew 166% and continue to contribute significantly to our women's business. Overall, our lifestyle categories grew 158% year-on-year as of 9 months. On Slide 8, let's review our online sales performance. On this slide, we review the total normalized as of Mavi including the sales to third-party digital platforms to which we wholesale, in addition to our direct-to-consumer on assets made up of Mavi.com and marketplace sales that are reported under e-commerce channel. Recall that our direct-to-consumer e-commerce share is now 10% of total consolidated sales. Including the wholesale e-com, which only exists in our international business, our total online sales grew 80% globally and is now 11.4% of total revenue. In Turkey, with Mavi.com, which was relaunched with a new update earlier this year, we enhanced the online shopping experience, offering speed and ease to our customers. Online sales in Turkey picked up momentum in the third quarter, bringing the total growth in 9 months to 71%, driven by 81% growth of Mavi.com and 63% growth of marketplace and operations and now constitutes close to 8% of total sales in Turkey. The international online business growth is on track with 93% in the first 9 months of 2022 and now constitutes 28.4% of total international sales. The fact that this growth is largely driven by our direct-to-consumer channel is promising. Our own platform Mavi.com grew 108% and marketplace sales grew 189%. Mavi's strong digitalization and CRM infrastructure will continue to drive our great trend in e-commerce. And as I noted in previous quarterly updates, the shift towards online will positively impact our margins going forward, being a full-price channel across all categories. As retail operations are back in the play, only channel capabilities are becoming more important for future growth and in improving the shopping experience for customers. Let's move on to review our margin performance on the next 2 slides. On Slide 9, with the rising labor costs, energy prices, currency and raw material trust fluctuations, and higher inflation in general, gross margin management is a major focus area. As guided several times throughout the year, the higher product cost started kicking in as of the third quarter, and we are seeing a normalization in gross margins as expected and guided. On the other hand, with the cost of production in Turkey increasing, and the exchange rates remaining fairly stable, we start with the 6 deterioration in international gross margins as well. Nevertheless, our strong brand strategy, dynamic product price planning, the new news and variety we bring in sponsor high consumer demand resulted with high surgery rates this quarter, and we managed to mitigate cost pressures. As a result, gross margin improved 120 basis points in the third quarter year-on-year, bringing the 9 months improvement to 330 basis points. As the product cost increase is even higher in the last quarter, we expect the gross margin level to trim back some more by the year-end. On Slide 10, we review our product -- our bottom line performance. The significant OpEx inflation in the third quarter was mostly leveraged by the strong top-line growth. We continue to deliver improvements in our rent ratios and our employee cost-to-sales ratios in Turkey retail business despite the high inflation. On the other hand, the inflation on international OpEx started to factor in impacting overall EBITDA margins. As a result, our EBITDA margin, excluding the IFRS 16 adjustments is stable year-on-year at 20.1% in quarter 3. Recall that the IFRS 16 impact on EBITDA has become lower compared to previous years because of 2 developments. First, the ratio of performance-based rent contracts have increased, leaving the related rent costs on the P&L. Second, the total run cost as a percentage of revenue is decreasing, hence reducing the impact of IFRS 16 on EBITDA. Therefore, the EBITDA margin, including IFRS 16, seems to have contracted 200 basis points in the quarter. As of the 9 months of 2022, we achieved a record-high reported EBITDA of PLN 1,860 million, including IFRS 16 adjustments with a margin of 25.4%, improving 190 basis points. The operational performance is mainly reflected on our bottom line. Net income margin in the 9 months of 2022 is 15.8%, which is significantly higher than last year, which is significant than last year or any other period pre-covid -- on Slide 11, we look into our operation cash flow and working capital performance. The average cost of inventory is 128% higher than that of same time last year, and we are taking several initiatives to mitigate product cost pressures such as cash payments, early bookings, early production, advanced payments for raw materials, and so forth. As of the end of October 2022, the inventory level in number of pieces in Turkey is only 19% higher compared to the same time last year, reflecting sales volume growth and inventory on hand common prices of all fresh season products. Net working capital is still close to our targeted strategic level of 5% of sales at 5.5%. We continue to generate significant operational cash in the third quarter despite increasing working capital requirements. Operational cash generation in the 9 months is TRY 1.52 million with a cash conversion ratio of 67%. Let's now move on to the next slide. We spent TRY 192 million in capital expenditures in the first 9 months of the year, resulting in a CapEx to sales ratio of 2.6%. On the retail side, we have a few store openings, square meter expansions, and new store concept transformations taking place. Apart from retail, we have been investing predominantly on IT projects and digital investments. With strong cash generation in the third quarter, our net cash increased 83% compared to year-end to TRY 1.34 million. All of the foreign currency debt, you see on our consolidated reports belong to our subsidiaries, all borrowing in their respective local currencies and hence, does not cause a currency risk. We continue our approach of holding no foreign exchange position in our balance sheet. On the other hand, average cost of debt is increasing in Turkey, and we foresee higher rates going forward. Also, the availability of funding is very restricted nowadays. In order to be prudent and make sure we have access to liquidity, we have received an approval from the Capital Markets Board for debt instrument issuance, and we are keeping it as an option. On Slide 13, we are confirming our full-year guidance provided in September. We expect to complete the year with 120% sales growth. EBITDA margin, excluding IFRS 16, to be 19%, plus or minus 0.5%, and including IFRS 16 to be 24%, plus or minus 0.5%. This implies a contraction in margins in the last quarter, which is in line with our expectations and our guidance since the beginning of the year. The stronger-than-expected Turkish lira also plays an important role in international margins as stated earlier. As always, I would also like to give you some color on the current trading environment as update. We continue to see great demand for our products and a positive pricing environment. Turkey retail same-store sales increased 143% in November and 120% in the first week of December year-on-year. I'm happy to report that online sales in Turkey has also performed well, including Black Friday sales and group under then 24% in November. Before I end my presentation and open the floor to your questions, I would like to share with you some great news that just came in today. We have been informed this morning that Mavi is included in CDP's Climate Change Global Ages with our reporting in 2022, among the nearly 20,000 companies that reported to CDP this year, only EUR 283 million were included in the A list becoming 2022 climate leaders. Once again, I would like to thank my whole team for their serious efforts. Mavi will continue to be a leader in sustainability practices with the mantra that a better world is possible with a better Mavi. With this great note, I would like to now end the presentation and turn on the floor to you guys for any questions you might have. Thank you.

[Operator Instructions] Our first question comes from [indiscernible].

Unfortunately, your voice doesn't come through. If any chats, if you can pose the question and I will do my best to answer them. I see you written that is a technical problem. So if you can pose the question, [ Rita ], I'll read through and give you an answer. So if there are any other questions, proceed.

Meanwhile, does anyone any questions? Okay, Serhat can go ahead, please.

My question is about your year-end guidance. You already mentioned there is a margin pressure as well as maybe normalization revenue growth. But for your year-end guidance, you should achieve only 100% growth in the last quarter, if I'm not mistaken. Can we say there is a clear upside potential on that front? Or is there something that we might be missing when comparing with the last year. And the next question after that.

Please, Kaya and pose the second question, and I'll answer a number of sign of things. Okay.

Can you please give us an update about the ratio of your rent expenses in terms of turnover base than a fixed base? And should we expect a change on that front going forward and the implications on your financials?

In terms of the year-end closing, I guess, the critical message as a team, we've been trying to share with the investment community has been mostly focused on the margin side. So you are right in the sense that like if you look at the current trading environment in terms of top-line growth, -- we might be more or less -- we have the capability to deliver a bit more for the year-end. We are being prudent on that end because these numbers are also new in terms of inflation, and there has been uncertainty. I mean as you can hear from my presentation, we're talking about 100%, 150% growth. So it is a bit sort of a moving target. So the key message, I would say, or the key takeaway that we've been trying to guide you guys as we more focused on we had early round in terms of product at hand and then inflation kicking in, but delivering good gross margins, which then is starting to normalize with cost increasing and our pricing capability also normalizing, let's say. Therefore, that's the sort of main message. In terms of modeling, again, some also weakness in Europe due to soft sales. So that might also come in a bit negative. We are still relatively bullish about what we can do in terms of top-line growth in Turkey. We are almost halfway through the fourth quarter, so far, so good. So you might have a point there. But again, we are being cautiously optimistic, let's say, in terms of the top line with. When it comes to the rent piece, in terms of rents, we have 100 stores that have total revenue-based contracts. And there are also 166 stores with contracts where we pay the higher of the turnover of the rent base. So when sales go up, there are times we have to pay turnover rent amount. So that's about 266 square. So roughly about 2/3 of our total rent bill becomes variable in any given point in time in a given month. In terms of rent ratios, traditionally and typically, our guidance has been -- we will be growing in real terms, higher than the rent increase ratios, delivering OpEx improvements. So I would hope that this good momentum as we continue to grow the square meter of sizes, open up new stores in this direction, our rent ratio as a cost as a ratio of sales and OpEx would improve. Our journey since becoming a public company, generally speaking, we have been able to quarter in quarter or semester to semester deliver rent ratio improvements. I remain, again, cautiously optimistic that also over the next couple of years, we still have margin improvement or OpEx increment areas in terms of rent, especially as we find more spaces to expand stores, which brings in a good negotiated rent. It also has a side impact of SG&A improvement as the store square meter increases, the ratio of also overheads to sales is as a percentage is becoming more efficient and also delivering economies of scale. So those are my key sort of feedback in this area. Thank you.

We have a question, written. He's asking about the normalized EBITDA margin going forward.

In terms of normalized EBITDA margin, I think I will be in -- or not only me, but as a team, we'll be in a position to give you a much clearer guidance as we close the year and finish and finalize our next year plans. So at this point, we will close this year in a more normalized, but in a higher than normal. I mean, like if you will recall, we opened them became public at 13%, 14% EBITDA. We've always guided for 17%, 18% of our trend target. We are now far away from that number. I wouldn't be surprised on a normal run rate that this company delivers around 18% to 20% EBITDA margin. So the biggest challenge next year is, as we are all witnessing the Turkish lira is now went through a phase where it was rental devaluation. Now is coming through a position where the inflation and devaluation ratios are going in opposite directions which is turning in TL cost increases and also real income increases in key outcomes for consumers and shoppers to buy. This is for Turkey. And also for export markets, we still have to see because it's still a big unknown of where the minimum wage increase and energy price coefficiency will materialize for the coming years, which will also impact our margin design and then make decisions on us how much pricing we can take, what our cost base will be, which will have both domestic also international impact because if the exchange rate doesn't move much, local production in Turkey, as you know, 80-plus percent of what we produce is being made in Turkey. So local production costs in dollar terms on eurothanes. -- we'll start to which will -- European and U.S. markets are a bit more inelastic in terms of pricing flexibility. We will definitely look into product mix and some price product mix margin opportunities, but that will also put forth a bit of a challenge for us in terms of managing about 20% of our business. So right now, I would probably zoom out from the daily concerns. But generally, on a macro level, say that this company under normal circumstances, again, is operating to deliver around 18% EBITDA margin. Next year, there's quite a bit of uncertainty of what might or might not happen. And again, to reiterate, I think we will have more clarity once we come to January and see the minimum wage impact and also potentially through the year in terms of when the elections are taking place and what the macro-financial take and measures that the government will follow. So, unfortunately, I cannot guide anything more specific than that at this point in time.

Just to clarify that 18% to 20% you're mentioning is excluding IFRS.

Yes, yes, yes. Thank you...

[indiscernible] do you have any follow-ups or anyone else has any questions?

Thank you, you're most welcome. I'm not too -- okay, one more question from [indiscernible].

Thank you, again. I mean we see strong demand from your results, but can we extrapolate this to the overall market? And can you make some comments about the competitive environment, especially after this USD stability? Does it work in favor of local retailers or -- and as well as foreign retailers. Can you comment on that front?

I think depending on who your audience and market target audiences this year overall, and I'll also give you a bit of a favor about the future. This year has been a different sort of levels of success for different brands. Mavi overall is more massive. We're not extra premium, we're not as good quality, good value proposition. So we will -- and we will remain, I think, not for now, but also for the future. We're in a great position where we can capture from both brands that are above us and also below us, and we will continue to benefit, I think, moving forward. This year, probably maybe the early part of the year, the more entry point brands might have had a harder time in terms of volume growth, although they have taken prices. This is what we hear from the market. So don't quote me on this as an official guidance. Having said that, on the premium and our Mavi and above brands, certain brands, especially something we didn't really necessarily talk today, but especially with the help of strong tourism have benefited in terms of good retail sales. So moving on -- taking what we know for now. Moving on to next year. I think some of the local advantage in terms of costing and producing in Turkey will evaporate in favor of the international brands as cost of manufacturing in Turkey go up. So there will be a bit of a normalization. And when I mention this, I'm thinking more as H&Ms are kind of brands vis-a-vis the -- as the bigger sort of price and volume competitors. So that's one thing. And the second coefficient besides the minimum wage inflationary pricing exchange rate ratios another thing that will be interesting to watch or that it will be the tourism coopetion because generally speaking, tourism and also there has been a bit of migration, which we also see people are moved into Istanbutala and certain cities and they're using their credit card. So that's how we can track whether they are tourists or they're residing in Turkey, looking at their consistent shopping with us. So that will also come into a new base. And we will have to see how that will impact also for the following years. So let's hope altogether that we have a similar strong tourism year next year, which will also, I think, continue to benefit both local and international. Generally speaking on Mavi, I don't want to sound aggregate, but I'm -- in terms of volume and balloons and consumer traffic and bullish on Mavi. I think the challenge is going to be more on gross margin. And this was an exceptional year where we -- now the really high up and also normalized closing to the year with a lot of margin pressures for next year. But as Mavi you will recall, over the last 5, 6 years, we've been together, our focus has been capturing the consumers roadwork, make sure our franchises rock. So we'll do our best to completely invest behind the brand and the products and the innovation and the shopping experience to make sure that we don't lose any market share. So that's going to be, as always, top of mind because once you lose consumers, then you're also hurting it becomes more expensive later down the road to reinvent them back into your franchise. And going back to you, I mean just to close the circle in goes back to what [indiscernible] mentioning. So it's early to see what big of a challenge we have I'm quite confident that once we come together once I close the year and we have more clear clarity on how this year is unfolding in terms of cost structure, we can give you more guidance in terms of how we will proceed. Generally speaking, Mavi is good. We had some advantage at the international through the year. Some of this is going to be washed away is my opinion to certain exams, Tourism will be a key co-efficient and also the capability of how much more pricing as there's also gone also social pressure and standing power pressure coming in, in the segment, this part of the year, let's say, in the second, let's say, or first and second quarters of next year. So a lot of challenges, definitely. So a lot of hard work ahead of us, and we are willing to take it full head on and give it our best is what I can say. In terms of David's question in terms of months is needed to cover all costs of square meter expansion. The good news is once we do an expansion, the ratios in terms of square meter sales, et cetera, is immediately impacting. So we typically our investment payback periods on expansion is less than a year or around 1 year. So it is just a bit of a CapEx and inventory that goes in. But immediately, the traffic ships up -- and whatever new merchandise we put on shop floor is selling and there's demand. And typically, what happens is more women customers are coming as bigger stores are more alluring and more appealing to women consumers as they are able to see more choice on the shop floor. So in terms of growth, growth eases again. So wherever, whenever we have the opportunity, we are at the snap of a finger building to take that opportunity and grow the square meter size up to 1,000 square meters in the shopping malls. [ German ], I think has a question.

Do you hear me now? Okay. My first question is related to financial expense side. In third quarter, I see increase in that front. How do you see the financing environment for you? Could we assume that your working capital needs increase or what are the reasons behind that? And do you expect any asset revaluation in the following quarters. Most of the companies did in third quarter and some others will do in the fourth quarter. I want to understand that. And the last question about the cost base compared to fourth quarter in fiscal quarter, not in your quarter, but with the current prices, the cost basis, you have and the expectations for the first quarter of the next year, 2023. Do you have any calculations in terms of potential cost increases, putting the minimum wage side? Do you still see some increase in costs going forward in the February, March or even in the June? Or are we close to the ending of the cost increases? I just related to your budgeting issues because we are hearing some increases in other sources in the sector in the last nonlisted area. But I want to understand how do you see the picture in terms of costs in the following quarters?

Okay, thank you for the questions. A lot of questions and if I miss something, you can come back. In terms of financing costs, yes, financing costs are increasing. As you can observe under the current sort of relative liquidity crunch, as, we Mavi are being extremely defensive and making sure that we remain as liquid as possible and to our work that hit in terms of financing costs and to minimize the need for cash or borrowing over the next period. At this point in time, -- we have quite a bit of visibility, not till the year-end. But in terms of how we are working, we have quite a bit of visibility, I would say, until the end of quarter 2 as to how we will be able to manage our cash situation. We have a plan B plan, as I also mentioned, if you need more cash, we have also applied for our bond issuance and if necessary, we can also use that. Clearly, from this day on, if and when we should choose to borrow moment, it's going to be more costing. So there is going to be a negative impact of borrowing -- and hopefully, we'll do our best to sort of back as little as possible and to push it out further down the road as possible with our good cash flow margin maintenance. So right now, we are not contango stressed out, and we feel quite relaxed. Our credit lines are okay, and we have a BC plan in terms of bond issuance and what we may have to do in terms of borrowing more money. In terms of asset revaluation, both in quarter 2 and quarter 3, we have done that, and we will continue to do that when it's necessary and whenever we have the space to do it. In terms of cost basis, we typically review our cost basis on a quarter-to-quarter like-for-like basis. So is the -- your question was more like from quarter 4 to quarter 3. Is the cost increasing? There is a bit, of course, teething that's going to definitely come, although you said Pringuet, but that's part of the question. That is going to come because of minimum wage increase. There is also another cost element that will come on top because of energy price increases that have taken place throughout the year. A bit of good news is coming from cotton prices, which has normalized. So that will also help us and give some breathing space in terms of the raw material costing. -- and we'll take it from there. And I think you were also asking from quarter 1 to quarter 2 does it settle down. Right now, as we look at things, I would say if there's going to be any normalizing, that's going to be more like quarter 3, quarter 4 when we come to a more like-for-like basis. But between you and me, then the change is going to be what is the exchange rate going to be at that point in time. So a lot of unknown from that perspective. And I mentioned the exchange rate more in terms of, again, energy and raw material, PL cost implication. Right now, again, as I mentioned, or as we try to guide you that in terms of where it's setting. We do see a normalized saving environment. carryover costs on a like-for-like basis becoming sort of normalized. And the question we will be answering across the next 6 months, how much of pricing, how much your consumer appetite and how much of volume growth will be able to deliver over the next 6 months. So there is a lot of uncertainty in that area. What we are more confident is we will keep our company agile. We will capitalize on the fact that we've produced in Turkey. So our response to entry and Salto will be as best as one can do and then take it with the flow and manage both cash situation, inventory and see the consumer sentiment alongside the margin pressure. So a lot of challenges ahead, which Mavi typically is in good in managing. And I'm quite confident that the team will look past, but it will be -- it's fair to say it will be about period next couple of months. I hope that gives you at least a context of where our mind and energy is.

Ladies and gentlemen, anyone else have any other questions -- we think there are no questions coming. Thank you for your contribution to our webcast. If you have any follow-up questions or comments, [indiscernible]. Have a great week. We cannot see you again in the next 3 months.

Thank you, Doug. Thank you, everybody. All my best for a happy, healthy, prosperous new year, and take care. Bye-bye.