Q3 2021 MYT Netherlands Parent BV Earnings Call
Ladies and gentlemen. This is your operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
[music].
Greetings and welcome to the micro Risha third quarter fiscal 2021 earnings conference call.
This time all participants are in electric only mode. Today's call is being recorded and we will have a lot. We have allotted one hour for prepared remarks and Q&A. It is now my pleasure to introduce your host for today Mark Peter My Teresa Chief Financial Officer. Thank you. Sir. Please go ahead.
<unk>.
Thank you operator, and welcome everyone to mitral results Investor Conference call for the third quarter of fiscal year 2021.
With me today is our CEO Michael <unk>.
Before we begin we'd 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, including the risks and uncertainties described in our quarterly report.
Many factors could cause actual results to differ materially.
We are in a 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.
You can find reconciliations of these non iff's financial measures in our earnings press release, which is available on our Investor Relations website at.
Investors Dot my Teresa Dot com.
I will now turn the call over to Michael.
Thank you Martin.
Also from my side, a very warm welcome to all of you and thank you for joining our call today.
I am delighted to share with you that the third quarter of fiscal year 2021 was one of the strongest quarters.
Ever had both in terms of financial as well as operational performance.
We again achieved many records across all areas of our business.
We clearly continued to benefit from the shift in consumer shopping behavior towards digital which shape. The strong results of the third quarter.
Even taking into account the lower comparable so Q3 and fiscal year 2020, the accelerated growth as evidenced by the two year growth rate of 66% in the third quarter versus the two year growth rate of 60% for the second quarter of fiscal.
2021.
While we continue to benefit from store closures in many markets as well as better deliveries.
Versus last year in March we also saw the positive effects of our rapidly improving consumer sentiment.
As customers begin to prepare for a post pandemic locations, such as social events and vacations.
Let me start my strategic review by clearly, stating that our positioning as a curated multi brand luxury platform.
Gives us both strategically and financially a fantastic position to capitalize those on the short term as well as long term growth opportunities in our markets.
Our success continues to be based on a sharp luxury customer focus.
Strong, Brian partnerships, and a focused profit making business model.
Strategically the most important driver for our business.
Is the continued shift of consumer demand from offline to online.
So in luxury.
Which has been significantly accelerated over the last 12 months.
We believe this trend will continue.
Maybe at a slower pace in the post pandemic world, but it will continue.
In fact recent research by Mckinsey stated that there is little reversal, so traditional offline retail expected in fashion.
The second most important driver for our business is the strong appeal and desire by customers for multi brand office.
Reasoned Alexa rankings. So the popularity in terms of traffic and site duration of multi brand offers in luxury.
Furthermore, we believe that our focus on the highly curated multi Brent also.
Q2, the big spending wardrobe building customer segments will continue to provide us with the best customer base, which is very difficult to attract the pure mono brand.
Finally, we believe that our focus on profit, making business model is perfectly aligned with any future development.
We have consistently delivered stable gross margins on the basis of our HIFU price here.
And very little dependency on promotional activities.
The majority of our cost base is fully variable and we continued to prove our ability to reduce customer acquisition costs.
This put together allows us to scale rapidly with solid profitability.
Now, let me call out some of the business highlights of this past quarter.
First of all we continue to make significant progress in our global expansion.
We grew across all geographies with plus 47% of net sales compared to Q3 of fiscal year 2020.
But I wanted to highlight the outstanding growth in the United States with a 76% increase in net sales over the previous year period.
The United States had a share of 13% of group net sales in Q3 of fiscal year 2021.
And we believe that there is still significant headroom.
We have recently announced the appointment of Heather coming at ski as New President of North America for my Teresa as of June 1st 2021.
And that will build out her team in the United States to increase our brand awareness and our local accessibility for customers.
Second we have significantly expanded our LTM active customer base by 34% year over year.
621000.
This was again fueled by exceptional new customer growth.
We actually beat our record of first time buyers in Q3 of fiscal year 2021, surpassing the Q2 number of over 100 pounds.
We have always stressed that the quality of new customers acquired.
The most important indicator for healthy growth.
There was some debate whether the new cohorts.
Lesser quality.
We are very satisfied to report that all cohorts of new customers acquired in Q2 of fiscal year 2021 show the same or even better we purchase rates.
By up to 20% in the third quarter compared to the Q2 cohorts of fiscal year 'twenty to 'twenty and their behavior in Q3 of fiscal year 2020.
Furthermore, not only did we significantly acquire high quality of new customers. We also saw a significant uptick in the average spend per customer with our top customers achieving a 10% increase in average spend year.
Over a year in Q3 of fiscal year 2021.
But we have always stressed that we rely and invest in.
An outstanding brand relationships.
We were again honored with outstanding support and trust from our brand partners in Q3 of fiscal year 2021, we.
We launched exclusive collections and styles as well as executed.
Three launches was brands such as Burberry would.
It will take a vendetta Marine said, Jimmy Choo Cmos in Russia, So Tim the article.
And Lewis.
The capsule collection of Marine said ex Jimmy Choo was the very first time, we brought together two designers to create exclusive products from Mitra <unk>.
Finally, we also wanted to mention that we launched your eyewear on our website in Q3 and ran a highly covered campaign called real off Italy, together with the Italian trade agency showcasing the design and craftsmanship of its.
Volume luxury brands.
We were not able to execute any physical events in Q3, we nevertheless held digital events with the designers of Rajavi D. Dwana Oddities, Shimon, Russia and pre policy.
Our top customers.
Fourth we demonstrated again in the third quarter, the consistency of our operations and performance.
We maintained business continuity across all operations with a focus in health and wellbeing of all my two recent employees is top priority during the third wave of the pandemic in Germany and across Europe.
This highly correlates with the significant increase in customer satisfaction measured internally with a net promoter score of 86% in Q3 of fiscal year 2021.
We further decreased our customer acquisition costs.
Achieved stable average order value.
And declining return rates from women's swim our women's wear department.
And all our cross margin ratios showed strong stability.
Not even further improvements.
Also we demonstrated again, our ability to achieve rapid growth with little reliance on promotional activities as evidence.
Our stable operational gross margin.
In contrast to some of our competitors.
With all the above it should come as no surprise that we are very confident to continue to benefit the fourth quarter from the ongoing shift to online.
Improving customer sentiment.
And much improved deliveries versus the fourth quarter and fiscal year 2020.
And now I hand over to Martin to discuss the financial results and guidance in detail.
Thank you Michael.
We'll now review the financial results for the fiscal third quarter.
And I'll provide additional detail on some of the key topics previously mentioned.
Unless otherwise stated all numbers referred to euro.
As Michael highlighted we are very pleased with our performance during the third quarter clearly above expectations when.
While we delivered strong net sales growth due to robust new customer growth.
And strong existing customer cohort performance.
With our proven business model.
We could scaled significantly in the third quarter.
Without any compromise on the quality of our profits.
During the third quarter net sales increased by $53 million or 47, 5% year over year.
164.8 million.
We continued to see strong customer engagement and retention as our active customers, who shopped with us in the last 12 months.
Through by 34.1% to 621000, and our total orders shipped in the last 12 months increased by 32, 3% to 1.384 million.
Cost of sales increased by $30 6 million or 49, 5% compared to the prior year periods.
Driven by our strong growth in total all the ships.
As a percent of net sales.
Cost of sales increased slightly at 56, 1% in the third quarter compared to 55, 3% a year ago.
Gross profit.
$72.4 million.
With an increase of $22 4 million or 44, 9% year over year.
Gross profit margin of 43, 9% declined slightly compared to the prior year period or 44, 7%.
Gross profit margin in Q3 was slightly below previous year due to seasonal shifts between quarters.
For the full fiscal year.
Our stable gross profit margin is expected.
Shipping and payment costs grew by $6 1 million to $19 3 million driven.
Driven by an increase in total orders shipped.
As a percentage of net sales ship.
Shipping and payment costs.
In this quarter remained stable at 11, 7% despite continuing internationalization.
We continue to drive efficiency in our marketing expense.
During the third quarter.
Marketing expenses increased by 36, 4%.
$222 1 million.
As a percentage of net sales.
Marketing expenses decreased to 13, 4% from 14, 5% and.
In the prior year periods.
Some of these increased marketing efficiencies are driven by the tailwind from the COVID-19 pandemic.
As well as restrictions on public events and campaign protections.
We are hopeful to execute more marketing events and campaigns in the remaining fiscal year and next year.
Selling general and administrative expenses grew by 60 million to $80 million.
Predominantly driven by one time granted share based compensation expenses.
For new granted awards related to the IPO.
We adjusted and net effect of $56 6 million.
In relation to these one time granted share based compensation expenses.
As we do not consider them to be indicative.
Of our core operating performance.
And as they relate to the IPO transaction.
Excluding this adjustment and $3 3 million of IPO preparation and transaction costs.
SG&A expenses as percent of net sales.
Decreased for the three months ended March 31st 2021.
From 15, 9% to 12, 3%.
Due to weak top line performance in Q3 fiscal year 2020.
And despite ramp up of public company cost.
Adjusted EBITDA was $11 1 million.
As compared to $3 1 million in the prior year quarter.
This is driven by an exceptional strong topline marketing cost efficiencies and SG&A cost leverage.
The adjusted EBITDA margin.
<unk> by 400 basis points to six 8% of net sales.
Adjusted EBITDA in this quarter only excludes the one time granted share based compensation a 56.5.
$5 million.
And $3 3 million IPO preparation and transaction costs.
Depreciation and amortization expenses were constant compared to the prior year period at $2 million.
Adjusted operating income grew by 7.9 million to $9 1 million.
Adjusted net income.
Was $4 5 million as compared to an adjusted net loss of 0.1 million in the prior year periods.
Including the onetime grant of share based compensation expenses.
Youll preparation that transaction costs and finance expenses on shareholder loans.
And therefore unadjusted.
We incurred a net loss of $50 million.
As compared to a net loss of $6 7 million in the prior year period.
We continue to focus on delivering profitable growth.
Which remains clearly visible in a very simple and transparent P&L.
With only minor and easily comprehensible adjustments.
We have always operated our high growth.
Profitable business model.
EBITDA adjusted EBITDA adjusted operating income and adjusted net income are non <unk> measures.
Moving to the cash flow statement.
During the nine months ended March 31 2021.
Operating activities used.
$39 8 million in cash and cash equivalents.
Primarily driven by a $63 4 million increase in inventories.
A $10 5 million decrease in trade and other payables.
As well as $3 9 million decrease in other liabilities and a $2 5 million increase in other assets.
The increase in inventories is in line with our exceptional sales growth.
And this in anticipation of continued strong sales.
While trade and other payables decreased as a result of payment timing for inventory purchases.
In terms of liquidity we.
We ended the quarter in a strong financial position.
With cash and cash equivalents of $56 million.
And total unused availability.
Under the revolving credit facilities of $19 million.
As of March 31, 2021.
In Q3.
For fiscal year 2021 we also use the $283 2 million net proceeds.
From the IPO to fully repay our shareholder loans of 171 8 million.
And are now completely debt free.
Turning now to our expectations for the current fiscal year ending June 30.
2021.
While we believe we have been benefiting on the top and bottom lines from COVID-19 related tailwind.
Due to store closures and restrictions in several regions of the world.
We see very positive trends on new customer quality and.
And existing customer cohort behavior.
As well as positive effects from earlier fall winter 21 deliveries.
In our fiscal Q4.
We expect these trends to stray strong.
Therefore, we raised our full fiscal year 'twenty, one net sales expectation.
So a range of 600 to 605 million euros.
This translates into a year over year growth of 33% to 35%.
Adjusted EBITA, we expect to finish the full fiscal year 'twenty one.
Between 55, and 59 million euros.
And therefore had an adjusted EBITDA margin.
Between nine 1% and nine 8%.
We believe that the fundamental shift in the market to an increasing online share of luxury shopping will continue.
Maybe on a slower growth rate.
Well the longer term with us are sticking to our targets.
Low to mid Twenty's net sales growth and stable adjusted EBITDA margins of around 7% to 9%.
I will now turn the call back over to Michael <unk>.
For his concluding remarks.
Thank you Martin.
We are truly delighted with the strong third quarter earnings report, which was above our expectations.
We see ourselves perfectly positioned to take advantage of the short term opportunities in the market that is the strong shifts to digital.
And the better deliveries by brand partners.
We have raised our guidance for the full fiscal year 2020 one.
But we also continue to see ourselves.
Perfectly positioned to take advantage of the long term opportunity in the market.
We believe that the positive trend towards multi brand digital platform will continue.
Maybe at a lower pace, but it will.
Continue in the post pandemic world.
And therefore, we continue to see strong growth ahead of us was 22% to 25% per annum.
And with a stable EBITDA margin.
And with that I'd like to ask the operator to open up for your questions.
At this time, if anybody would like to ask a question. Please press star one on your telephone keypad.
Again that is star one on your telephone keypad. Your first question comes from Kimberly Greenberger from Morgan Stanley. Your line is open.
Okay. Thank you so much.
Fantastic quarter. Congratulations I think this is your debut quarter, obviously, you've got the December quarter early her back really really nice results here.
I wanted to ask about what you're seeing.
Here in the fourth quarter in markets that are that are reopening or that are fully opened for example, I think UK shops have now been open for about five weeks.
Is there a read that you can extract.
There from the way that you are seeing spending shift if that luxury spending for example is going back to the shops. How is your business performing in that market I'm, just wondering as you're as you're sort of watching Europe reopened if you can give us any color on how your business is ebbing and flowing through that.
Sure Kimberly I'm happy to do so as just commented.
What we what we have seen over the last couple of weeks and particularly also already in Q3 is that on the one hand the shift to digital.
That seems to be a permanent shift in behavior. So while we may not see that exploration going forward and see the shift to digital or more pace I think.
We believe the overall judgment.
Shape to online is a permanent shift in consumer behavior.
And the second element of what we saw and see at the moment is that.
So if there was always the hypothesis about pent up demand there is significant pent up demand for clothing vacation clothing, bridal clothing, and I believe the whole sector is profiting from that so it stores benefiting from that as they open but also us and so what we currently view.
And therefore, what we extrapolate from.
The behavior Q3 in two hours.
Your guidance, which ended June that this shift to online, but also this positive consumer sentiment.
It's clearly also driving or Q4.
That is really really encouraging just a quick follow up on that do you feel like your inventory is well positioned.
For the reopening for the pent up demand that youre seeing.
Are you able to chase into any style.
And then as we think about sort of medium term growth over the next one or two years should we look at the you know let's say.
60% two year stack growth that you saw for example in fiscal second quarter and think about that is that good.
Guidepost for the upcoming year or I'm not sure. If you have any any sort of.
Color preliminarily that you would like to share with us on how you're thinking about revenue growth in the upcoming year as you're lapping what has just been an absolutely astounding or this year.
Yes.
Try.
Tried my best Kimberly still who are very much deep into the current fiscal year.
And as we still have a couple of weeks ago regarding chasing inventory.
That's too late and our high end luxury world inventory has to be secure much more on the bonds, but nevertheless, we feel we're very well prepared for this ship because we always continue to buy.
Without an assumption that we will never come back we always I mean, the four window by coming in how our teams whereby on the basis of we will be back into a world where social events will take place wherein weddings will take place. So we continued to buy was that attitude.
Of course, not being able to predict precisely when the vaccination rates will be of sufficient level.
Feel well prepared for this rebalancing back to high heels to dresses.
And so we should be able to take advantage and benefit from this.
<unk> spending on those category.
Going forward, our our best view is that.
The 12 last 12 months have really created a new base.
A new base, because we pushed a bit the possible with button in terms of our nine share growth.
And so this is we don't predict a reversal, we predict that we will.
Go from that base on words with a healthy growth rate.
Mid twenties.
As the medium term view.
Next 12 months that we will maybe still have impacts of COVID-19 hopefully.
Really not.
And worst case, yes, but the long term view is absolutely rock solid.
<unk> 2022, 25% growth every year with.
Strong profitability.
Absolutely confident to deliver on it.
Fantastic and good luck here.
And your next question will come from Matt Boss from Jpmorgan. Your line is open thanks.
And congrats on a nice quarter.
So thank you maybe maybe as a follow up on the top line Michael could you, maybe just elaborate or speak to drivers that you believe fueled the 600 basis 0.2 year stacked improvement relative to last quarter and that's despite brick and mortar reopening and then I guess with that just as we look forward.
Have you seen any notable step down in the stacked growth rate for Q to date that would support the lower implied two year stack in the fourth quarter that you've embedded in the guidance just maybe any puts and takes that you've embedded in that fourth quarter revenue forecast I think would be helpful.
Yeah.
Sure I mean, the pandemic still makes predictions of a very tough job, but as always we want to be transparent in our thinking at least not.
I'm not claiming we know exactly how the future plays out so the strong growth of Q3 really showed that in addition to.
Another record number of new customers. We also saw.
Significant uptick in average spend of existing customers, which was an additional element that drove the extra.
Performance of 66%.
Two year growth rate and that we really tied back to.
Can be open to the improving sentiment in the clear.
Expectation of being back in the public vacations be it rivals and so forth. So that's something which we clearly <unk>.
Spect to continue that as even more of explanation rates happen.
That this positive view on.
Needs and occasions to buy clothing.
Definitely a trend that will continue to be so.
The dry or the positive driver of new customers coming to online.
We still assume that there is a component of tailwind.
This as as closure and Lockdowns are relaxing, but maybe some customer segments.
A bit shy of going back into and through stores and department stores.
So there is probably still a component where we could and should expect a bit of a lower rate increase in online share than what we have seen as I called it fast forward over the last two years, but.
It is it is a trend to state. It is it is a base to start from so.
We continue to believe we will see significant uptick in spend we continue to believe we will acquire significant new amounts of new customers.
Maybe at a lower rate compared to what we did to 212% and therefore.
What we are predicting is super strong Q4.
In terms of our full year guidance, which is of course, a implied guidance also in Q4.
But at a slightly lower pace.
Great and then maybe just a follow up on the gross margin Martin could you just break down the drivers of gross margin in the third quarter and just any puts and takes or how best to think about the development of gross margin in the fourth quarter.
Yeah sure sure Matt.
The gross margin is a bit slower completely due to seasonal shifts between the quarters also relate to try out for us.
We have on the nine months development.
20 basis points.
Below the previous year.
Figures and as I said on the.
On the call.
In the preceding section that we clearly target and expect towards at least fully stable gross margin for the full fiscal year.
Great Best of luck.
And your next question will come from Oliver Chen from Cowen Your line is open.
Hi, Thank you Michael the U S opportunity sounds pretty substantial what are your thoughts on what's ahead with local access and what what could be very positive for you also if you could update us on.
The the pipeline ahead for China, and key priorities there in terms of strategy and how it may or may not be different from your existing approach to marketing and awareness and distribution. Thank you.
So I'm not sure I fully agree we do see significant potential in the U S with our current share of 13% and total group net sales. We firmly believe there is significant headroom and therefore as explained in previous.
Our calls we are.
Increasing the investment in terms of adding <unk>.
Resources to the U S market, we have announced recently the appointment of a.
As the new President of mitral renal North America.
Her leadership role one of her core task is to increase the number of local personal shoppers being available to our local customers orchestrating and organizing brand awareness campaigns orchestrating organizing customer events on the ground in the U S. We continue to see.
Very good traction with customers that buy very high satisfaction rates.
Customers that buy so the bottleneck is really bringing customers for the first time onto the platform and that's what she and her team will focus on and as she starts.
June 1st I mean, she will already.
I'm joined Ronnie.
The high velocity ship, but.
Firmly believe and we're very excited about being able to secure that she can make us even faster.
And this is always what we stressed.
This is about a global product, but it also requires customer.
Intimacy customer.
Proximity in terms of services in terms of having someone.
In your in your same time zone that you can reach out, particularly for our top customers and Youre aware of how important those are.
And we will already in this calendar calendar year.
Really retch up the speed of putting resources in devens onto the ground of course also having now the opportunity to organize so it's really a perfect timing as the pandemic.
Retreats and there's continuous relaxation.
How you can organize such ebags.
The opportunity in China, we always stressed is.
At least.
Our opportunity.
In the U S and North America.
Of course the.
Challenges or the.
Requirements for this market are very different.
Completely separated ecosystem in terms of technology in terms of legislation.
We have to clearly state that our brand awareness is probably even lower in this market, which makes the opportunity even bigger in terms of really putting resources on the ground. We are of course still.
Hampered by the very strong restrictions of travel into mainland China.
Hope that also there the relaxation will take place current guidance.
Officials as more beginning of next calendar year, and then earlier and so the route.
Increasing our local business is.
Yes.
Mimicking the same and while we haven't anything to announce on partnerships. We of course continue to invest so just last week, we had a very successful <unk> event organized in Beijing.
Because of course these events already possible in mainland China. So we are working hard on brand awareness, we are working hard on establishing.
Tighter and more intimate customer relationships.
The timing for putting more resources on the ground is a bit later than what we do currently for the U S.
Okay. Thank you and Martin the customer acquisition cost momentum that's been quite impressive as we model. This longer term what do you see happening there, particularly as you think about events and.
How this may evolve over time, thank you.
Yeah Oliver.
I mean this is clearly in line with what we've seen in the past quarters. So we've seen.
Decreasing online marketing cost in relation to the customer acquisition cost, so improving marketing efficiency there without compromising on the quality of the customer that we're attracting.
But.
Also as set in the previous calls we want to.
Reinvest those online marketing cost efficiencies.
To hum into other marketing activities, especially in <unk>.
Increasing the brand awareness in regions, where we are Underpenetrated for example, U S or other regions and therefore, we guide towards a more stable.
Marketing.
Cost ratio.
And we've seen here.
In this quarter and then we guide for the full fiscal year.
Decreasing marketing cost ratio.
This is terrific.
As a I mean in the past quarters and also and what.
What we see in the last weeks.
The opportunity to do physical events, which are which are inherent inherent also in our business model that we desperately need to do.
To be even more effective effective on the on the customer acquisition, we will continue.
Increase that ratio.
So the overall guidance is to reinvest the online marketing cost efficiencies into.
<unk> brand awareness campaigns.
And therefore guide towards stable marketing cost ratio.
Very helpful. Thanks, Great quarter Best regards.
And your next question will come from Michael Binetti from Credit Suisse. Your line is open.
Hey, guys congrats on a great quarter.
I wanted to ask about margins continue the questions here on margins.
I'm curious as you are guiding for the high end.
And in the fourth quarter of almost 10% EBITDA margins, but saying.
Seven to nine is still the right long term to think about.
Is that the right rate to think about for next year and if so is there some kind of reinvestment.
It seems like there might be some discrete reinvestment that you'd be able to speak about today, if you're guiding this year to $9 nine at the high end of your guidance, but.
709 is still the right range for next year, and then I have a follow up please.
Sure.
Yes, Michael let me take them.
Definitely.
Kick it off and then you can add I mean, there's two effects obviously in this fiscal year that lead to.
Adjusted EBITDA margin exactly as you said on the top end of nine 8% and first of all it's coming back to the marketing cost ratio, but we are not available.
Being.
Able to to invest as much in brand awareness campaigns that we would like to have done and so we will in the next quarters and years will want to increase that.
Ratio to increase brands in the markets, where we are underpenetrated to capture and this is the core essence to capture.
Top line growth in the strongly developing market to attract and retain the right customers for us.
And the second is obviously.
Our ramp up of public company costs that we.
Didn't see in this quarter, which will continue to see in the corporate governance setups.
Compliance set up and all of those.
Public company cost.
That we that we expect to have with the following quarters. So there is nothing to worry about regarding our EBITDA margin.
But obviously the a nine 8%.
Top end of our guidance for the full fiscal year.
Is also a bit driven by COVID-19.
But the special situation of this year. So the overall trends that we target is the 7% to 9% adjusted EBITDA margin.
Obviously, we want to continue to grow profitably and to continue to have strong do you have this diligence growth and be very professional about how our unique business model growing.
On a profitable basis.
But.
We also want to focus on on.
On attracting the right customers are growing.
On the top line capturing share in this highly attractive market.
And that's why.
We that's why we kept the midterm guidance of 7% to 9% adjusted EBITDA margin also to give us flexibility.
On the on the following quarters.
I guess.
As a as a follow up on the.
On the commentary about the new cohorts that was that was it.
Very interesting to hear I'm excited to hear.
And he said the new customers acquired are showing repurchase rates up to 20%.
Relative to prior cohorts.
As we think about customer growth in the near term in the fourth quarter, obviously, you've got yes, one year and two year rates that are well above.
Where I think you thought you'd be at this point and you're conservative modeling, but you've since you already have.
Three of the four quarters that influenced the fourth quarter active customer rate can you just tell us does that is that something you expect to decelerate.
In the in the fourth quarter.
And if so could you marry that with the.
The new cohorts coming in at much higher frequency I'm trying to think about what metrics might slow.
The puts and takes within the revenue guidance and the two year stack that Matt asked about earlier slowing in the fourth quarter. Please.
Sure absolutely.
Got it.
Insightful questions.
The performance of better repurchase rate. We believe will continue we truly believe we have a quite strong quality of new customers the area, where we are.
Taking a bit more conservative view is the amount of new customers coming in and so that is in your modeling. If you look at Q4, and if you take the implied to your growth rate that is where we are a bit more on the conservative side, because we have seen in Q2 and Q.
<unk> massive influx of new customers and we believe part of that is driven by Lockdowns.
Lockdown store closures.
The good news in this is the best news for US is that.
All those customers that came in.
At least the same quality if not even better.
As you right. When you said there is this on.
Ongoing.
Effect of colder courts driving business next year the year after so that will remain.
We took a bit more conservative view on how many new customers will come in this last quarter.
Therefore, the two year growth rate is still in line with the full fiscal year.
Not matching the exceptional and extraordinary result of Q3.
Okay.
Okay. Thank you very much.
And your next question will come from Flavio.
Should we now from Jefferies. Your line is open.
Hi, Hello, Good afternoon, Mike.
Martin so.
Three quick questions from me number one regarding the U S. As you mentioned in the release you talked about further investments in the U S and you touched on it in that in a pretty answering previous question.
Do you have another <unk> heart can be as well do you have a better view.
Do you have better visibility that you can share with us at what stage do you hit critical mass in the U S. Whereby you need to have a local hub.
Poster shipping out to Europe, because it's could you I'm, assuming you can't be far from that today.
Second question I had was in yen in Q3, which was of course the exceptional.
Once we were hoping it would be.
You mean, the end you sell what you previously bolt. So I was just wondering if it was there a stage in the water perhaps earlier in the quarter, where you have to replenish perhaps.
More aggressively than you expected with with some brands, maybe with some bestsellers in particular to basically keep up with demand.
And number three quick questions.
In terms of men's Wearhouse men's we're ramping up relative to your expectations. Thank you.
Thank you Flavio so quick answer to your three questions number one.
Local hub is on the roadmap, but nothing for the next 12 months. So we will of course announce if we are getting closer to that but we're not as close as you may think in terms of setting up.
An additional hub in the U S. So this is still further out but it is on the wrong.
Number two.
The.
Sorry, let me start with <unk>.
The ability to to re plan.
<unk> has created very unique opportunities because as you know replanting replenishing during the season as is usually very difficult, particularly if youre interested in best sellers because everyone is interested in best centers.
<unk> had some unusual effects because while.
A lot of the online channels, where we're going very well.
Of course retail channels suffered and so there was an imbalance in stock availability and we were able to get hold of additional merchandise.
In channels that did not perform as well for the brands. So this allowed us because as you are right. When you say in our model in the current model you can only sell what you bought and so we were able also thanks to our exceptional brand relationships to.
Stock up.
Pete the demands that we were that we were.
All students.
<unk>.
Sorry. Your third question, just remind me menswear men's warehouse that was from <unk>.
Menswear, we're extremely happy with the ongoing performance that can be shared with you that at the end of the first calendar year, we were at 10% and we continue to see very strong growth and so we continue to to.
Expected believes that also for kids, we actually that the share of these businesses and our total business will continue to increase.
Great. Thank you very much.
Again, if anybody would like to ask a question. Please press star one on your telephone keypad.
And then one on your telephone keypad. Your next question comes from Alexandra Stryker.
Your line is open.
Thank you very much for taking my questions and congrats on a great quarter. So as a follow up to Michael's question earlier, you had very strong growth in the top customer segment with plus 28% year over year could.
Could you maybe unpack some of the drivers and also share some of the initiatives you're focused on to attract more top customers and also drive.
Revenue per top customer and then second.
Any updated thoughts for that category expansion as we noticed that give me say beauty pop up on their side right now. Thank you so much.
Thank you Alexander and good to see that you follow our website closely.
On the first part.
If I unpack the strong performance of our top customers.
We clearly see that there have a much wider range of spending opportunities. I mean, this is a customer that did not suffer financially over the last 12 months, but of course, the occasions and the reasons to buy wardrobe, where some little bit more limited.
The unusual and as the opportunities to go on vacation as the opportunities.
For invitations for events.
Hum.
Humming.
Expected by these customers as they look ahead of the year, we see that they start to buy also in categories that they bid.
Neglected and that is one key driver of the very strong performance of average spend per customer.
And so this is really driven by an improvement in consumer sentiment.
Key component of course of our top customer.
Relationships are the personal shoppers and also there we have an ongoing plan to increase the footprint I mean, the U S of course, all sort of target for that.
That is one of the lever for those top customers.
I want that relationship we always see it's very beneficial.
Two to fulfill their needs to make them happier customer satisfaction community drives business and.
The third component is we were able as stated in Q2 was three two.
To do virtual events, we had the designers of Roger did you.
Case about Adobe a dry dock joined artisan so we did.
Provide as good as possible and take it to this amazing industry, but we are looking forward to really organizing events our pipeline is really.
Filling up I mean, we have announced recently that we support.
After the Pompidou in Paris, which is giving its NAS exhibition before.
Longer closure for refurbishment.
Opportunities are Paris to invite type of customers and clearly at least based on the current view we have to be careful about based on the current view. We are looking ahead for our September fashion week cycle in New York, London, Milan, Paris that should have physical events again should have physical shows.
So we also.
Ramping up for that.
In terms of new categories.
We are always ongoing Lee review opportunities and as you rightfully said we.
We have launched a pop up.
Recently with in collaboration with Este Lauder, presenting some of the high end.
<unk> care product itself.
But also products from them.
From.
<unk>.
And this is just.
Efforts to understand will the customer acceptance because our whole lot Jacob category expansion is always driven by.
The customer needs to give us the right to do this this is not based on the spreadsheet.
This is.
Understanding old is a huge revenue to regain it all starts in our case with the customers and if customers say, yes, My Teresa Europe, a right to play in this category than we will pursue it and this is exactly what those.
<unk> these.
Test balloons are serving to really understand what are customers looking for when they shop and buy Teresa definitely believes there are many more opportunities in the wider luxury lifestyle.
But there hasn't been.
A concrete decision on adding a new category at the moment.
Great. Thank you.
This brings us to the end of our Q&A session for today.
And thank you for everyone who has joined US today. This concludes today's conference call you may now disconnect.
Sure.
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Sure.
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