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Gross margin was also ahead of expectation and increased by 6.6 percentage point Q over Q to a record high of 51.5%, mainly driven by improvement in utilization rate and cost reduction efforts, partially offset by an unfavorable foreign exchange rate. Operating margin also increased by a similar magnitude to reach 41.2%. As we highlighted last quarter Fake Hermes Bags, we incurred a higher income tax in the second quarter.

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