So that is more or less what explains this over performance. We did a year fiscal 2023 at plus 30% in Travel Retail. We are continuing to grow at plus 20% in this channel. And this, again, despite the fact that we are still far under the level of travelers in Europe, specifically Chinese traveler, we believe that only 30% of the levels of Chinese traveler pre-pandemic are now back outside of China. So there is still some room over there, if this happens one day. Now when it comes to the questions around the trade, Q2, but also inventories.
Laurent Mercier: Yes. So maybe to start on your second part is on data. We are not seeing any slowdown in categories offset in October. So these are definitely one element and this is what we are focusing on. Then number two on trade inventory. The inventory is very healthy. This is what I can tell you. The only element I will add and which will enter this phasing Q1, Q2 is up of course, as Sue mentioned at the beginning, is that, our Q1 was very strong on innovation. And there is a natural pipe fill from our retailers on the great innovation that we are launching. And with very, very strong results, which is Burberry Goddess, Hugo Boss here, and we have also Gucci Manual. So there is really a mechanical effect of pipe fill for retailer, but which will translate in very strong sellout in Q2. So this is really the way you need to model the equation. It is between selling by fill and Q2 is always a quarter of strong sellout, especially for Prestige.
Operator: Our next question will come from Chris Carey with Wells Fargo. Please go ahead.
Chris Carey: Hi, everyone. So just a few quick follow-ups, hopefully. So just on the mix line, relative to pricing. Laurent, I was in the impression pricing would be something like mid single-digit incremental in February and March. I think you said low single-digit earlier in the call. I may have missed heard you. But is there, an expectation for less pricing because you are getting such strong performance on mix, and also that inflation is decelerating maybe you are seeing what you need to price for, or if it is possible, I may just misheard you. And then on the, it is a small question, but just on the obsolescence. Was that just you had built-up so much inventory because you wanted to be ready for the sell-in and it was just a little bit less than you were expecting. And you had to take that in on the gross margin in the quarter. And so maybe just any perspective on that, of course, in the context of strong delivery, if you want. Thanks.
Laurent Mercier: Of course. So let me clarify the first point. I mean, we never say that we will do mid-single-digit in February, so I want to make it very clear. So now indeed, we are seeing low-single-digit, but then you made the point is that it. We are really monitoring in a very targeted manner and granular manner. Indeed, because of so, we have a favorable effect from the mix. And the favorable positive effect from the mix is also driven by the accretive innovations we are putting in place. So in a way, it is really where you put the frontier between pricing or mix. And of course, we are putting it the accretion from the innovation in the mix part. But of course, at the end of the day, the objective is that all these initiatives, mix, it targeted pricing and also strategic revenue management are here really to increase the average unit price.
And this is really what we put under this an umbrella of strategic revenue management. And second element, yes, we are seeing inflation starting to ease, especially in COGS and transportation. So we are making sure also that we are adapting our growth equation in assortment. But I want to be very clear that we keep focusing on value creation and really implementing all the levers that we have in our hands. So yes, your second question was on E&O. No, just to be very clear, I mean, the demand this year. There is just some pure mechanical, and I will say, accounting effect that indeed last year due to service level issued, inventory was pretty low. We rebuilt inventory. This is a strategic decision we are making really to have a service level, which is a good service level.
Now we are 96% to service level, which is a great achievement. And also to make sure that it the sellout, which is strong, is really successful and we observe the product. So it is again mechanical accounting treatment, but no concern at all in terms of inventory. And that is why now I’m telling you that we are seeing a flattish gross margin in Q2. And there will be some acceleration of gross margin in H2 fiscal 2024.
Operator: Our next question will come from Ashley Helgans with Jefferies. Please go ahead.
Unidentified Analyst: Hi this is [Sydney] (Ph) on for Ashley. It was just wondering if you could give kind of any color into what you are seeing or expecting for the promotional environment heading into holiday?
Laurent Mercier: Harf do you want to take this question?
Peter Harf: Yes. I mean, but overall and I can confirm you and what you see that the sellout is very strong and the sellout is very strong with premiumization. This is what we are a thing both in prestige and consumer beauty. And again, the clear demonstration is that the innovation that we are launching, which are with higher value, higher price. Definitely, we are seeing very high demand. So no, we are not seeing any increase in promotional. Maybe to give more specific item. I mean, last year, due to the service level issues, a shortage of components. We reduced drastically or defect, defect is usually in the mid-teens ratio last year it much lower. So this year, we are bringing back to a normal level of defect, but this is a normal way of animating the category, it is it healthy. But okay, this question that we are not seeing indeed overall promotional increase of promotional activity in our categories and in our categories and in our activities.
