Results for the first half of 2020 were worse than expected. Revenue fell 40.3% year over year to €938 million. E-commerce business increased 150% year over year. Overall gross margin fell 1.3 percent year over year to 70.4%. Overall operating expenses were reduced by 23.7% year over year, but sales expenses for closing stores during the closure period were about 112 million euros. As a result, the first half of 2020 recorded a net loss of 180 million euros. There were no dividends in the first half of 2020, and the 2019 dividends were also withdrawn.

Earnings per share are predicted to be -0.015 euros in 2020, raising earnings per share forecasts for 2021 and 2022 by 4.6% and 7.3% to 0.086 euros and 0.096 euros, respectively. Since opening operations, the company has observed continuous improvements in all market segments, particularly in the Asia Pacific region. The company's management aims to increase gross margin to approximately 75.0% by 2021. The company expects that if the improvement trend continues and there are no serious outbreaks of the epidemic, operating results for the full year of 2020 will be break-even.

The target price was raised to HK$30.80 and upgraded to a “neutral” rating. We expect the improving trend to continue in the second half of 2020, and we are more optimistic about the company's business recovery in 2021, mainly driven by strong full-price sales, rapidly growing e-commerce business, improved profit margins, and effective cost control. Our new price targets are equivalent to 39.0 times and 34.8 times the price-earnings ratio for 2021 and 2022, respectively, and 3.0% room for growth. As a result, we upgraded our investment rating from “sell” to “neutral.”