And then importantly, all wholesale is not created equal. There’s a bifurcation between top-tier wholesale, where we’re growing, and doors across the markets. Top city, top doors are performing meaningfully better the balance of fleet. And that’s where we can do some interventions that Patrice described that are working in DTC, like investing capital and renovating, make sure we have great environments, investing with our partners in greater service levels. We know that, that works, those doors are performing better and is a place where we can concentrate resources and give an ROI. So, I think we have a good operating game plan and strategic game plan for wholesale. Where — we saw pullback in about two-thirds of our doors, we evaluate every day, where should we be and looking at that on a door-by-door basis and we’ll continue to do that into the future.
Operator: The next question comes from Bob Drbul with Guggenheim.
Bob Drbul: Good morning, and thanks for taking my question. Patrice. I guess, Jane, can I follow up on the balance sheet? The balance sheet is very strong. We’ve heard some of your peers update their capital allocation strategies. And what Patrice just referred to as early uncertain environment, how are you planning to manage the balance sheet capital allocation going forward? Are you doing anything differently? And also, can you just elaborate a bit more in terms of I don’t know, country trends or really what you’re seeing throughout Europe with the outlook that you’ve given us again? Thank you.
Jane Nielsen : Sure. Thanks for the question. The current operating environment is volatile. But our performance through it makes us even more committed to our strong balance sheet and culture of operating discipline, all of the things that are really critical to our Fortress Foundation with the agility of our team, it’s what really enables us to continue to drive the plans through tougher times. And we think that our focused foundation and the way we manage our balance and our commitment to capital allocation is increasingly a strong differentiator for us — and we’re always interesting and interested in doubling down on just differentiation. So, I think the short answer is we’re going to continue on passionate about discipline in managing our balance sheet and sticking with our capital allocation principles, which drives growth and investments and return capital to shareholders.
And it’s not just words and principles, it’s producing results for our shareholders. We’re on track with our capital allocation and shareholder return commitments that you heard us talk about at Investor Day. At the halfway mark, we returned about $1 billion to shareholders in the form of share repurchases and dividends. Our cash position remains extremely strong. We’re in a net cash position, and our leverage is nearing our historical levels and those levels are usually low with our targeted one-time to two times EBITDA leverage. And our inventories are clean. Our inventories are down 5% this quarter with units down double digit. And importantly, North America inventory was down double digits and Europe in constant currency was down mid-single digits.
Again, we expect to end the year tight inventory discipline that inventory will be down as we exit the year, improving our overall terms. So, we’re more committed than ever Just on the country trends that we’re seeing across Europe.
Patrice Louvet: I’ll jump on that training balls. So, Bob, I think there are a few observations that apply to all the regions, and then I’ll give you specifics for each individual one. So, the observations applied to all the regions is environment is choppy, but our core consumer remains resilient, right? And we’re seeing actually a nice growth with our core consumer a higher value, less price-sensitive consumer, and that’s true across all three regions. We’re also seeing really good performance this quarter. I think it’s one of the highlights of the quarter in our DTC channels across all the regions. So, every channel, every region, positive comp growth, brick-and-mortar and digital. Third area is we are continuing to recruit new consumers, and we’re continuing to recruit new consumers in Asia, in North America, and in Europe, higher value, less price-sensitive younger consumers.
And our general internal metrics of traffic and ADT and AUR are consistently up across all three regions. So those are common elements. We have seen improvement in our outlets with our, particularly our more value-sensitive consumers. The interventions that Jane and I have been talking about have been impactful during the past quarter. So, we’re quite encouraged by the strengthening that we’ve seen in our outlet channel and our ability to really connect with that smaller consumer group, but still they are a value-oriented consumer. Now if I look at things by region. So North America, our biggest region, down 1%. Again, DTC growing right, comps up 4% in DTC and North America, growing across all the channels. The pressure Jane mentioned, it is more in wholesale.
And here, we have differentiation between high-end wholesale, as you highlighted, Jane, the markets of this world where we are growing the top doors of our largest partners where we are also basically flattish, and then the doors that are more challenged are kind of think to 100 and beyond. And we have an action plan to go strengthen that, that you heard from Jim. In Europe, on the face of it, we’re down 1%, actually, if you do like-for-like, we’re actually up, I think, 3%. If you take to remove the timing shifts from a wholesale standpoint. Likewise, here, we’re seeing strong performance in DTC across all the channels and wholesale continues to be challenged, again, on the space of it. But if you take the timing shifts out, actually wholesale grew in Q2 in Europe.
And we’re seeing a really nice rebound with one of our largest partners in Europe. So that’s quite encouraging for the future. In Asia, we’re up 13% on a constant currency basis, nice diversified growth across our key markets, China being the fastest-growing region for us there, up 20%, both Mainland and HMT. So, we’re feeling really good about the continuing momentum we have in that region. The brand is resonating. The product offering is connecting nicely, and the teams are doing an excellent job executing our key city ecosystem approach in our top six cities Japan delivered a nice quarter with double-digit growth, and Japan is not yet benefiting from the return of group tourism from China. So, there’s more growth to come down the road in that part of the region.
And then we’ve seen solid growth across Southeast Asia and the balance of the region. So hopefully, that gives you a bit of a sense of commonalities, a lot of common elements across the different regions and then what’s unique to each individual one…
Operator: The next question comes from Matthew Boss with JPMorgan.
Matt Boss : Great. Thanks. Patrice, so maybe could you elaborate on the structural building blocks that you’ve put in place, which you think drove the material acceleration at direct-to-consumer here today? And then how you see the brand position in the holiday to potentially continue to take share? And then, Jane, could you just outline the drivers of the raised gross margin outlook for this year? And if there’s any change to mid-teens operating margins as the target as we think to next year?
Patrice Louvet: Good morning, Matt. So, our game plan continues to be driven by our overall goal, which is and strategy, which is brand elevation across our three pillars: brand building, driving the core, and expanding to more from a product standpoint, and expanding our TCD ecosystem. What we have seen in terms of short-term interventions that have really resonated well in DTC have been the work that we’ve done on products leaning harder into core because during these challenging times, as I mentioned earlier, consumers are gravitating towards core products. And for us, those are our more elevated products, so less seasonal items, less tees shorts and fleece and what are truly iconic Ralph Lauren products, jackets, Oxford shirts, heat separate, cable mix sweaters.
