So I am or we are, I think, realistic, optimistic mid-term about China. When it gets to the Yeezy, there is nothing else to say than what we said last time. We are working on different options. The new thing is now that all the inventory is now on our books. Most of the inventory are in the right warehouses and that we could theoretically sell product if and when and how is still in the evaluation. But of course, the decisions are getting closer and closer because that’s the way it is. And we have spoken to all interesting parties many times, and there are 3, 4 scenarios that are now building. And as soon as we have, what should I say, all their evaluation done in a way that we and then, to be honest, even our Supervisory Board feel comfortable, we will then go out with the decision.
And that could happen in the, I would say, mid-term, in the future.
Erwan Rambourg: Best of luck.
Operator: The next question comes from Simon Irwin from Crédit Suisse.
Simon Irwin: Can I firstly just come back to you on China, particularly since you’ve had the partners in town. How many points of distribution have you now got in China? And has that bottomed out? Or do you think there’s kind of a further decline to come? And secondly, when you talk about the route to margin, you talked about gross margins of up to 50%. So to get to the 10%, you mentioned — 10% EBIT, you mentioned on the last call, implies at least 500 basis points of operating leverage. I mean, do you — is it leverage or do you see an opportunity to cut costs? I mean, how do you think you cross that gap and how long do you think it will take?
Bjorn Gulden: The number of sales points in China, if you combine our own, our partners is around 8,000. Now you have to remember that only points of sales is not relevant because it’s also the size of them. And what you have seen during COVID — actually, before COVID that they were starting to open bigger stores. So instead of the numbers, it’s also the total amount of square foot. But we have reduced, I would say, the number of sales about 2,000 stores and it’s now around 8,000. But it doesn’t mean that we have reduced 20% of the square footage because some of the stores are bigger. I think that right now, that is good, but then I do expect again as the business stabilizes in the growth mode that we can open stores again in the third and fourth and fifth tier cities again, that you will actually see store base is going up again.
But again, that’s too early to do right now. When it gets to the gross margin, then 45% is, of course, not acceptable. Even with a 65-35 split between Wholesale and Retail, the margins should be close to 50%, if not 50%. And again, it’s not only leverage. It is — you have to remember that we are running at a very high discount. We have, because of the high inventory, written off high values. And then again, a lot of the inventory that we now are selling have a very high freight because it’s been bought at container rates about 10,000 and has also, from the sourcing cost, has the highest price. So I would be surprised. I’m looking at Harm, but I hope that this is the lowest gross margin that we will have. This and the next quarter are kind of the type of product that has the lowest margin, and then it should start to improve in the second half.
