Q2 2021 MYT Netherlands Parent BV Earnings Call
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Hi, everybody.
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Ladies and gentlemen.
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Greetings and welcome to the <unk> second quarter fiscal 'twenty 'twenty One earnings conference call. At this time, all participants are in a listen only mode.
Today's conference call is being recorded.
One hour for prepared remarks, and Q&A. It is now my pleasure to introduce your host Martin Beer <unk> Chief Financial Officer.
Sir please begin.
Thank you operator, and welcome everyone to <unk> Investor Conference call for the second quarter of fiscal year 2021.
With me today is our CEO Michael Kreger.
Before we begin we would like to remind you that our discussions today will include forward looking statements.
Any comments, we make about expectations are.
Our forward looking statements and are subject to risks and uncertainties.
The risks and uncertainties described in our quarterly report.
Many factors could cause actual results to differ materially.
We are under no duty to update forward looking statements.
In addition, we will refer to certain financial measures not reported in accordance with IRS on this call.
You can find reconciliations of these non <unk> financial measures.
Our earnings press release, which is available on our Investor Relations website.
Investors.
Teresa tough call.
I will now turn the call over to Michael.
Thank you Martin.
I am proud to welcome you all to our fourth quarterly earnings call as a public company.
Let me start first by thanking our teams Bryan partners and for most of our customers all the support passion and trust over the last years as my Teresa developed into one of the leading digital platforms for luxury fashion in the world.
During the IPO Road show, we had the opportunity to share our story and describe our unique positioning in the digital luxury space with investors from around the world.
We received very positive feedback and support for many of you for which we are very thanks.
Our journey is still at the beginning and we are more excited than ever about the future business of mitral reason.
The IPO was a major milestone for us as a company.
But I am proud to say that we as management.
And all our teams are now even more focused than before to create a fantastic future for mitral Lisa.
Before I jump into the highlights of our second quarter of fiscal year 'twenty, one I would like to summarize again, the fantastic investment story behind my Teresa.
First of all we operate in a rapidly expanding market the digital share of global luxury fashion is projected to reach over 30% by 2025, representing a 110 billion market in euros.
Roughly three times the size in 2020.
Secondly, my Teresa is uniquely positioned in this market with our differentiated focus on the high end wardrobe building customers looking for duration.
Therefore, we believe we will retain a strong competitive lead over other platforms.
We are about installation and not just aggregate.
Thirdly, because of our loyal customer base strong business model and consistent execution, we have delivered continually high growth combined with stable profitability over the last years.
Which we believe we will continue to do so in the future.
Our high end customers mitral visa offers an unrivaled curated luxury added constant.
Constant offer of products and catch suits only available with us.
And outstanding in House managed service experience and of course to access to the world of luxury.
Exclusive events.
For our brand partners, we offer visibility to a customer base that is not easily accessible through mono brand sites or simple aggregate us.
We create partner specific marketing excellence.
We're really addressing luxury clients, we protect brand equity through a strong focus on food price sales.
And finally, we can provide valuable customer insights as we analyzed multi brand shopping behavior.
Our fully commitment to acquire and retain the best customer base in the industry creates a reinforcing cycle of outstanding brand relationships.
Feed of superior customer value proposition, then generates strong customer economics, which allow us to stay true to our strategic focus.
Therefore, we will continue to invest heavily in our growth.
While not needing or wanting to sacrifice our current profitability levels.
Our second quarter results precisely reflect this strategy.
While we currently benefit from some COVID-19 related tailwind in some geographies. It is very clear that our success, so far and our future success is based on our fundamentally strong strategy and execution.
Martin will walk through the financials in greater detail, but I want to draw your attention to some key highlights for the second quarter.
Our net sales grew by 32, 9%.
We had a record number of first time buyers for quarter, reaching more than 100000.
First time during the second quarter of <unk>.
Fiscal year 'twenty one.
We again managed to decrease the customer acquisition costs.
We maintained continuity of our operations.
With a strong focus on health and wellbeing of mitral visa employees to fight COVID-19.
On December 28, we had a record number of over 11000 shipments, leaving our warehouse on a single day.
Our menswear business continues to develop the bus our expectations accounting already for more than 10% of net sales in December.
Underlines, our ability to extend growth into new categories.
For our top customers, we were able to Organise digital design of events with brands like Kate.
Era and wardrobe NYSE.
And we did host a physical VIP event in Shanghai in December.
Our internally measure net promoter score increased to a record level of 87% in the second quarter.
We were able to present to our customers in Q2 of fiscal year 'twenty, one capsule collections and exclusive launches from brands like Valentino Montclair.
Deutsche in Gabon on this.
<unk> the waiver maxmara amongst many others.
We are also in very positive discussions with some major brands to further develop our current partnership models to increase merchandise availability.
Finally, as you know a key characteristic of our business is to focus on full price sales and we again reported stable gross profit margin of 49, 5% in Q2.
Full year 'twenty one.
As you can see our second quarter has been very successful even considering some tailwind from the Covid pandemic.
And now I hand over to Martin to discuss the financial results and guidance in detail.
Thank you Michael.
I will now review the financial results for the fiscal second quarter and I'll provide additional detail on some of the key topics previously mentioned.
All financial figures that I reference will be Andrews.
As Michael highlighted we're very pleased with our performance during the second quarter.
Where we delivered strong net sales growth.
On increasing new customer growth and strong existing customer cohort performance.
With our focus on attracting and retaining the high end customers.
We achieved the strong topline growth with a stable slightly increasing gross margin speaking to our identity on full price sell through.
And our top brand positioning.
The exceptional strong top line and the continuing online marketing efficiencies are driving bottom line profitability.
As Michael said, we're currently benefiting from Covid related tailwind due to store closures and restrictions in several regions of the world.
These tailwind created at the moment results above our expectations, both at the top and bottom line.
Those beneficial effects may slow down in Q3, and especially in Q4 with store openings.
In addition.
Please bear in mind that our fiscal Q2.
As always a strong quarter for <unk>.
<unk> of <unk>.
<unk> due to seasonality.
Nevertheless, we believe that the performance of the second quarter without any COVID-19 tailwind will meet our clear expectation of continued low to mid 20% net sales growth combined.
Combined with consistent profitability as achieved in each of the last years.
During the second quarter net sales increased by $39 2 million or 32, 9% year over year to $158 6 million.
We continued to see positive momentum in our customer engagement.
Our active customers, who shopped with us in the last 12 months.
<unk> grew by 28, 2% to 569000.
And our total orders shipped in the last 12 months increased by 24, 4%.
Two 1.256 million during the second quarter.
Cost of sales increased by $19 million.
41, 2%.
Compared to the prior year period, driven by the growth in total orders shipped.
Gross profit of $78 6 million was an increase of 22 million or 34, 6% year over year.
We achieved a gross profit margin expansion of 60 basis points to 49, 5% of net sales driven by an increase in full price sell through.
Our strong gross profit margin is also typical for our fiscal quarter to and should not be taken as a trend for the whole fiscal year.
Shifting entertainment costs grew by $3 6 million to $17 $8 million driven.
Driven by an increase in total order shipped.
As a percentage of net sales.
Shipping and payment cost this quarter decreased from 11, 9% to 11, 2%.
Due to Brexit and upcoming seasonal effects.
We expect the overall stability and thus cost ratio for the full fiscal year.
We continue to drive efficiency in our online marketing spend.
During the second quarter marketing expenses increased by 13, 9% to $19 7 million.
While our active customers grew by 28, 2% to 569000.
As a percentage of net sales <unk> marketing expenses improved to 12, 4% from 14, 5% enterprise year periods.
We believe that the significant drop is also driven by the tailwind from the Covid pandemic.
And we will also hopefully start executing many more offline marketing events and campaigns in the remaining fiscal year.
Selling general and administrative expenses grew by $4 3 million to $22 1 million predominantly driven by adding new fulfillment personnel to support a 24, 4% increase in orders ship from $1 1 million to one.
Two $6 million.
SG&A cost as a percentage of net sales improved to 13, 9% of net sales from 14, 9% of net sales in the prior year period.
We believe that new being public costs were partly offset further SG&A cost leverage and fiscal year.
EBITDA increased to $18 7 million from $9 3 million in the prior year quarter.
Adjusted EBITDA was $22 1 million as compared to $12 9 million in the prior year quarter.
Our strong topline performance continuing online marketing cost efficiencies.
Table operating frustration and some SG&A cost average drove the adjusted EBITA margin expansion of 318 basis points to 14% of net sales.
Adjusted EBITDA in this quarter, mainly excludes IPO preparation cost of $3 $5 million.
Depreciation and amortization expenses were relatively consistent compared to the prior year period remaining around $2 million.
Subsequently operating income increased by $9 3 million to $16 6 million.
Adjusted operating income grew by $9 2 million to $20 1 million.
During the second quarter net income was $15 7 million as compared to $6 3 million.
In the prior year period.
Adjusted net income was $14 8 million as compared to $6 4 million in the prior year period.
On the net income level, we also adjusted the finance expenses associated with our shareholder loans.
Which we do not consider to be indicative of our core performance and.
And we adjusted for the resulting tax effect.
We remain focused on delivering profitable growth.
And this is clearly visible in our very simple and transparent P&L.
With only minor and easily comprehensible adjustments.
We have always operated high growth and profitable business model.
EBITDA adjusted EBITDA, adjusted operating income and adjusted net income.
Our non <unk> metrics.
Moving to the cash flow statement during the six months ended December 31, 2020 operating activities used $29 4 million in cash cash equivalents.
Primarily driven by a $62 8 million increase in inventories and a $2 6 million increase in trade and other payables.
The increase in inventories is in line with our exceptional sales growth.
<unk> is in anticipation of continued strong sales.
While trade and other payables increased as a result payment timing for inventory purchases towards the end of the six months ended December 31 2020.
In terms of liquidity, we ended the quarter with cash cash equivalents of $5 2 million.
We had approximately 46 million and borrowings on our revolving credit facilities.
Slide one 4 million was reserved parental guarantees and tact contract counties.
Total unused availability under the revolving credit facilities as of December 31, 2020 with.
$42 6 million.
Subsequent to the end of the fiscal second quarter.
January 25, 2021, <unk> successfully completed its IPO to raise net proceeds of approximately $344 2 million U.
U S dollar after deducting underwriting discounts and commissions.
On January 26, 2021 <unk>.
Mitra reset exercised the option to repay the fixed rates shareholder loans print.
Principal plus outstanding interest.
With a portion of the IPO proceeds.
Which resulted in cash outflows.
170 million euros, or $206 6 million U S dollar.
With the repayment of the shareholder loans and the seasonal borrowings under our revolving credit facilities.
<unk> now is debt free.
It has over $60 million.
Cash attach.
Turning now to our expectations for our fiscal year ended June 32021.
We are quite pleased with our excellent net sales growth of 34% for the first half of the year.
However, as we look to the second half of the fiscal year, we expect a flattening of the COVID-19 driven growth effects.
Resulting in our expectation for net sales.
In the range of 565 million to $580 million or 26% to 29% year over year growth.
We expect the gross margin stability for the full fiscal year.
And we expect to continue to drive online marketing cost efficiencies to fund our strategic brand awareness initiatives.
In addition, we expect to continue to see leverage in SG&A, but this will be partly offset by public company costs.
Consequently, we.
We expect adjusted EBITDA in the range of 45 million to 48 million euros.
Representing 27, 36% year over year growth.
Which translates into an adjusted EBITDA margin in the range of 88.
Eight zero to eight 3%.
Apart from the current Covid tailwind, we stick to our long term targets.
Low to mid Twenty's net sales growth.
And stable adjusted EBITDA margins.
I will now turn the call back over to Michael for his concluding remarks.
Thank you Martin.
<unk> was started in 2006.
With the IPO, we achieved a major milestone for our company.
I am extremely proud of our achievements.
We are only at the beginning of our journey.
We are now in a toolbar.
Key protagonist above Lee will remain the customer.
Our passion.
And analytical focus on customer value is the secret sauce for our company.
Fines also the core assets of our company.
We believe so.
So much more opportunity for us and.
And we thank you for your support.
And with that I'd like to ask the operator to open up for your questions.
Certainly at this time, if you would like to ask a question. We ask that you. Please press Star then the number one on your telephone keypad to withdraw your question just press the pound key.
We will pause for just a moment you compile the Q&A roster.
Your first question comes from you all.
We do ask that you limit your questions to one and one follow up.
Our first question comes from the line of Kimberly Greenberger from Morgan Stanley. Your line is open.
Oh, thank you so much.
Good morning in the U S and afternoon in Europe, Congratulations on a very nice debut here.
I wanted to just start with a question on the brand partners and Michael I think you hinted at this during your prepared remarks.
That maybe you're in discussion to expand.
Assortments with some of your select brand partners and Im wondering if Dave talked about.
How do we expand the assortment and if any of them have discussed potentially.
<unk> model with you.
Thanks, Yes.
I didn't say that we are in discussions with brands also hearing the.
Possible.
Once we always stress that.
Model.
We will evolve the industry overall evolves. We are we are in discussions with some major Brian.
Would allow us to have.
On a more continuous basis X two products more products.
These are ongoing discussions.
<unk> has been.
We can develop.
So we're fully laid out in terms of financials. So nothing at this stage to disclose other than that we are in positive discussions and where can you.
The developing partnerships with key and major brands on brand partners.
Okay, Great and then my follow up is on the record high number of first time buyers here in fiscal <unk>.
I think you said over 100000 new.
First time buyers.
Do you think that was helped because their brick and mortar store closures.
Or even pre COVID-19.
Potentially would've been the trajectory that you're on.
Or maybe it's the improvement in marketing effective affected net maybe you can just unpack that a little bit for us and talk about the contributing factors. Thanks, so much.
Sure I will try I think you correctly named the contributing factors.
Unpacking them is a bit difficult. So we do believe that we are benefiting in some drag routines from.
Pandemic COVID-19.
Cost tailwind.
We would have I mean, our business is.
Such a trajectory that.
We are reaching records constantly so this record of over 1000, new first time buyers in a single quarter, we would've hit anyway.
Maybe not this quarter, maybe next quarter there are.
Our August contained wins with so many stores closed at least at some point of time during the second quarter, how large they are.
It's pure speculation what will happen to those new customers add stores are reopening.
In respect to the nation also.
The good thing about all of that.
The fundamental driver for our business is that.
12%.
Global luxury fashion was bought online.
And in the next four years this share will triple so the fundamental driver has been in place before the pandemic will be in place after the pandemic and variations in between.
What they are.
And we are we are living through quite volatile times.
Great color. Thank you so much.
Your next question comes from the line of Matthew Boss from Jpmorgan. Your line is open.
Great. Thanks, and congrats on your on your first call.
Phil.
Michael maybe to touch on.
At 12%, which would be online luxury penetration for the pandemic I think forecast at Bedford for 30% by 2025 I guess my question is clearly I think the crisis.
Elevated or potentially even change that target and have you embedded any potential acceleration into your forward forecast.
And more so im curious what youre seeing on that timeline in terms of the 12 going to 30 over that period. If we think about it by geography potentially if we broke down maybe what you're expecting or seeing in Europe versus Asia versus the U S.
Thank you great great question.
Also thank you for that.
Congrats.
Sure.
We have not built any acceleration.
I have not seen any further exploration being published by analysts or market researchers about this forecast, but you're correct concluded by <unk> 25 per share should reach should go beyond 30%.
Again.
We have over the last 12 months.
Consumer behavior.
Impacted by the Quebec.
Hopefully something that will end soon.
We may have accelerated a general trend it may not have accelerated a general trend we have not changed our forward looking expectations.
Just on the basis of.
102 strong quarters.
So that's the answer to number one number two.
For instance by geographies that they have.
<unk> been some differences in geographies.
The interesting or not interesting thats the wrong word dramatic characteristic of this pandemic.
Is that it is unfortunately, a global mobile pandemic hits.
It's many many markets may be different.
Different times funded.
Hi, everyone.
And our market is the global market. So we clearly have seen that.
The buying patterns in Asia have come back to it.
Two the same patterns that we have seen before meaning.
The difference between buying backs and high yields and U.
Versus.
Versus just.
Quote unquote uncomfortable loungewear, clearly driven by the fact that in many Asian markets.
Asia Pacific markets even.
Social calendars had restarted.
There is the ability to organize parties and events, which unfortunately, we have not seen.
In Europe.
Any places in the Americas on the other end.
And retail as we opened it was never as long.
<unk> impacted in Asia, whilst bricks and mortar retail than it has been unfortunately in Europe.
In the U S. So I think.
What we see in terms of recovery in Asia to backfill.
To a comment not related to micro reset the rebound of luxury consumption has been quite significant in Asia. So that.
Sure.
Has been.
And many of the numbers published by brands.
And so that has been.
Is a good precursor.
May come or may not come into your device.
The.
The preference for online.
Okay.
Hasn't been traditionally actually lower than some of the European markets in the past the consumer in the U S. The consumer in the UK the consumer in Asia has been actually more digital.
Drama.
Unrelated to the pandemic just general trends before.
So we may or may not see action and it all exploration for online adoption in Europe based.
But again a.
A lot of interest a lot of what's a lot of speculation.
This is not driving our business.
Planning this is not driving our business.
We're basing all of our decisions are attracting the right cloud customers with the right offers.
I think one of the key highlights for me in Q2 is not only the fact that we saw.
<unk>.
Top line and customer acquisition one of the key highlights for me is again stable gross margin, which is a key characteristic of our business model.
It's funny, you say that that was going to be my follow up question Martin I knew that could you just talk.
Could you just walk through the drivers of gross margin in the second quarter.
And the strength and just how best to think about maybe some of the puts and takes of gross margin for the back half of the year.
Yes, Thanks, I will do so.
Bear in mind, the gross margin has always been very stable our business model in the last three years, we achieved a stable gross margin and gross margin speaks to evident speaks to our positioning of our business model on the on the high end side on the customer side and on the high end brands.
Syed.
And so stability of the gross margin will always keep that I missed.
Obviously in focus also going going forward.
So this quarter.
It's no different to other quarters, focusing on the high end customers and of the Hyatt brands.
And continuing what we do so successfully a bit uptake in the gross margin as reported is due to a higher full price sale.
Sure.
That is the.
Then the the key the key determinant of the public.
Gross margin.
Great.
Your next question comes from the line of Michael Binetti from Credit Suisse. Your line is open.
Hey, guys. Thanks for taking my questions and congrats on the first quarter out of the gate here.
Yes.
I'd Love to ask you about the forward guidance on margins I know, you've said a number of times through the process in today that you want to bake in some conservatism in the second half.
With the reduced visibility is luxury stores around the world start to reopen.
On the EBITDA margin from what we can tell in the second half of the fiscal year.
In the past three years.
That EBITDA margin looked like six 9% six 5% seven 9% I think your guidance pencils out to about four 4% to five two in the second half. So I just wanted to know your thoughts on how much conservatism is baked in there versus invest.
And so you do want to make to fund the nice growth you're seeing right now.
We should think about as we look through the different lines in our models.
Yes, maybe.
I can answer and then Michael can add to that.
Bear in mind that the first half of the fiscal year. So July to December is always a stronger.
EBITDA margin when compared to the second half.
<unk>.
And so.
Even.
A decrease in the <unk> from the top line.
Paired with what we outlined at the cost lines that we will increase.
Offline marketing events that we will have additional being public costs on the SG&A side.
We clearly expect and Thats.
Why we put this guidance.
Eight zero to eight 3% EBITDA margin.
With our focus.
Not so much on the EBITDA margin, but more on attracting and growing with the right customer base.
And with this focus.
We're comfortable.
And stick to it clear guidance that we give for the fiscal year 'twenty one.
Okay and then.
I'll ask one follow up we've heard from a few other global retailers. Some all digital some a big digital.
Both digital and brick and mortar and we've heard that.
Places like Australia, you are starting to see sales really accelerate even in digital and that.
The market where.
Covid has been fairly well contained with the consensus view in the summertime so perhaps.
We're celebrating a little bit maybe we're seeing some early signs of pent up demand that people are wondering about for the rest of the world.
You have countries in your model that you would consider a.
Similar.
Characteristic where COVID-19 is fairly contained.
Is there are there any leading indicators that tell you.
We need to be more conservative as global.
Luxury stores reopen versus the digital trends in these markets, where COVID-19 is getting well controlled are still seeing strong trends in digital I love to know any perspective, you have on some of the leading indicators you see in the business.
Yes, I'd be happy to take that question I mean, I think it's very interesting to go through the factors.
Some of the factors.
But I think that would happen if hopefully the pandemic.
And the center cut.
Some people feel comfortable again on the one end.
A lot of bricks and mortar or a lot of department stores will reopen so you could argue that maybe driving customers back to a higher degree of physical on the other hand.
A lot of events social.
Red carpet.
The name it will start to be back on the comment about which is as we know a big drive luxury good shopper.
Gowns and ready to wear which is a big big.
Part of our business.
Poland after pandemic coming to a stop which we haven't seen the kind of the areas that have been under control and continue to isolate themselves so travel leisure travel.
Holiday travel.
It is still even.
In Asia Pacific, where that makes seems to be more on the control that still.
Possible because.
Great results to have achieved have been mainly achieved by strict border controls and travel is also a big driver for demand, but also to.
One from a luxury goods, but also.
In the past at least a lot of luxury sales were.
Travel retail or travel destinations. So there are many factors and again.
Honestly it is.
It's probably an entrance.
The aim of which would be more which would be less.
Benefiting us our buying team is now preparing.
And by portfolio into 'twenty, one and.
The guidance for them is.
Expect that consumer behavior is.
When it has been in the past years.
Making any speculations about wil.
We'll be revenge.
Spending some thing we have seen in some Asian markets that will be.
Our new modest fee because of the social crisis.
Sure speculation and we refrain from that because we have a very clear strategic roadmap.
And we just.
Consistently follow it we have seen not as big crisis.
See last year, but we have seen crisis last six six years.
And the best thing, we always did was stay on course.
Guidance.
Since the business model on a consistent growth level.
The system to stay true to full price.
And leading indicators.
Predictions are tough and they have always been tough right now.
Don't rely.
Business management.
Predictions are leading indicators, but on the community deal strategy.
Consistency, we believe is a key driver for our long term financial success.
Thank you so much guys and congrats again.
Once again, if you would like to ask a question. Please press Star then the number one <unk>.
One key pound.
Limit your questions to one and one follow on your next question comes from the line of Eric Sheridan from UBS. Your line is open.
Thank you so much for taking the question, maybe if I can follow up with.
Sort of a two parter on the brand discussion we've been having so far in terms of where you see the discussion with brands going over the medium to long term.
So how do you think about the output of those conversations between you getting more flexibility about what inventory and control into your platform versus the brands, putting more of what they want into your curation model over time and then the second part would be as you expand into new categories, you talked about like men's and children's how do you think that gives you more.
<unk> ability in terms of deepening the relationship with the brands. Thanks, so much.
Thanks, Eric.
Brian.
Those are key to our business and we have always taken the approach to.
Make it work for both sides and really create true partnerships. So at the end all our discussions are focused on.
Is there something we.
Together with the brands can do to excite customers to buy luxury products off the brands in question and so what we are trying to achieve with further evolve our business model is exactly that improves the value proposition that we as a platform and as a brand can have.
Our special customer base because in the end, we're talking a lot about that we are serving a customer that is really looking for inspiration. It's one.
Important, but it's one segment.
Driving.
Our business with inspiration was capsules.
Special edits and Thats, where we are partnering and of course.
More access to even more selection more access to items that out already.
<unk> already sold out items that are limited distributions highly interesting tool to our customers. So we're working on.
Business models that allow us to create allow us really perform the excellent service that customers are known for and allow us to create the marketing angles, the marketing stories that.
We seem to be also.
Good.
And that as I always said it can be done with owning inventory can be done without owning inventory that's not the point. The point is how do we create.
Our initial and extending into menswear and kits were yes of course.
Also improves our value proposition on both ends on the customer side in particular with Kids square I mean this is an.
The extension of the core women with customer that we have.
<unk> 24 for more than a decade, and we've seen very positive reaction to certain customer groups to offering also luxury could square men's wear is a new customer units from your customer that moves in the same sort of community and social kind of breakdown of women's customer, but its a new customer but that of <unk>.
<unk> also strengthened our value proposition towards towards brands and our ability to present today.
The brand story across women's and men's kids is.
Feature.
We are oriented to use that for.
Partnerships, we have in the last year launched capsule collections that actually cut across mens womens and kids wear.
And why we believe the spoofing.
Always the case.
It does create additional angles and also that.
Can solidify and more important deals will broaden.
The partnership with brands.
Revenue growth potential with these new categories, but there was also and as you rightly pointed out the.
The strategic value by being present in all three categories at least for the moment.
Thank you.
Your next question comes from the line of Oliver Chen from Cowen Your line is open.
Alright, Thank you Michael Martin Congrats on a great quarter.
Our surveys indicate a lot of great opportunity in the U S and China, how do you see the mix evolving over time and what are your priorities in terms of building awareness, because there's a big awareness opportunity.
As we think about marketing going forward and brand ambassadors.
<unk> you've used in certain regions.
How might the marketing spend composition change in the context of the reopening and also how are you.
Continually seek to innovate marketing spend thats relevant with what your customer wants.
Thanks, a lot.
Yes, I mean.
It is clear that we have as a company.
Opportunities both in the U S.
In China or in Asia, as we know that.
Brand awareness is far lower than.
So it was more traditional markets in Europe, while we see that customers shopping in our website actually to express the same high level of satisfaction that we've seen in Europe. So there is.
An opportunity to generate first trial.
Then to convince and retained customers was great services offers.
The marketing strategy as discussed in the past is really directed at boost.
Boosting upper funnel.
And as upper funnel brand familiarity and reputation. So that's why while we believe there is.
There's still more opportunity to improve online marketing efficiencies.
We will not.
Bring that to the bottom line, we will bring that to invest in.
Up the funnel marketing in upper funnel marketing can take many forms some of which we were of course.
We were of course.
Constrained over the last couple of months because a lot of what you brought up the funnel, while sometimes events or.
Outdoor postings was not practical.
The big Metropolitan areas that didn't make sense. So some of what we do.
Bind with upper funnel marketing will hopefully.
Possible again as the pandemic retreats.
But also on the digital and we have strategies that are moving away from the pure.
Last step conversion.
Marketing spend but also on the digital side with all the different social media platforms.
Both.
Western markets, but also the different social media platforms in Asia.
We do see opportunities.
Creasing awareness, increasing reputation cooperating proposition that will be a focus as we go forward.
It's why we continue to guide that.
We drive growth and very stable cost.
Ratios.
You don't see in those is they're constantly shifts within the different cost buckets moving from one.
Some bucket to the other two really dry.
For growth.
And in Europe, particularly in the U S and Asia.
Thank you Martin a follow up on Q2 seasonality that you called out what's within your control and what should we pay attention to when we're modeling that for timing and how the marketplace may evolve with promotions or not and timing. Thank you.
Yes, I think all of us.
We talked about the quarterly.
Formants of my trees in the past years and also.
<unk>.
Talked earlier on.
Upcoming years and we see.
Stability on obviously Q2, and Q4 being strong quarters with two seasons.
Fully delivered.
Coming seasonal mostly delivered.
So once he is fully delivered the upcoming season, mostly delivered.
In achieving.
Good sell through full price sell through with that and.
Quarter, one and three being a bit weaker on that end and this trend I mean modeling going forward.
I'll continue.
I mean, obviously, there's always minor shifts from certain brands delivering earlier or later.
And.
As outlined earlier, we'd be obviously.
Barry.
I'm happy to receive your merchandize as early as possible because it is.
Targets to our high end to the best customers that we have they want to have.
On the seasonal merchandise early to buy.
And.
From what we see right now in Q2, and then looking forward to Q3 Q4, and then it will be next fiscal year.
There is no.
Major shifts and what we've seen.
We expect due to COVID-19 or to a different brand behavior. So far there's no change in that.
Quarterly behavior that we see.
Thank you very much best regards.
There are no further questions at this time.
Thank everybody for joining <unk> second quarter fiscal 2021 earnings conference call.
Appreciate everybody for joining you may now disconnect.
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