If block insead Each block in Svelte does not work

I am trying to render conditional elements/slots inside an #each block in svelte and I cannot figure out why it does not work. The following code does not work in Svelte:

<Menu>
  {#each items as item}
    <Item>
      {#if item.icon}
        <Icon slot="icon" icon={item.icon} />
      {/if}
      {#if item.label}
        <Label slot="label">{item.label}</Label>
      {/if}
    </Item>
  {/each}
</Menu>

There are a decent amount of moving parts so I wired up a small Repl to show this in action:

https://svelte.dev/repl/b089c2c379e9404596445c16311bd1b9?version=3.50.1