Q4 2022 MYT Netherlands Parent BV Earnings Call
Greetings and welcome to the mitral a soft fourth quarter and full fiscal 2022 earnings conference call.
At this time all participants are in a listen only mode. Today's call is being recorded and we have allocated one hour for prepared remarks, and the Q&A. It is now my pleasure to introduce your host Martin bed much reaches Chief Financial officer. Thank you Sir please begin.
Thank you operator, and welcome everyone to <unk> Investor Conference call.
The fourth quarter and full fiscal year 2022.
With me today is our CEO Mike Sievert.
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 forward looking statements and are subject to risks and uncertainties, including the risks and uncertainties described in our annual 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 <unk> on this call.
You can find reconciliations of these non <unk> financial measures.
Earnings press release, which is available on our Investor Relations website at investors adopt my Teresa Dot com.
I will now turn the call over to Michael.
Thank you Martin also from my side very well come to all of you and thank you for joining our call today.
We want the day comment on that.
Thoughts about fourth quarter.
Thanks, Paul.
Year 2022.
We are very pleased with our results our business has shown excellent strength and resilience in some very challenging economic.
And geopolitical tax.
Micro visa has accelerated its top line growth in the fourth quarter. After a slower first quarter and continued to show excellent profitability.
Believe this actually sets us very much apart from other digital platforms in the market.
Improves.
<unk> positioning and business model of our company.
We focus on the true luxury wardrobe building consumer.
In our last earnings call in May we mentioned the negative customer sentiment that hit us, particularly in Europe with the outbreak of war.
Ukraine.
As expected centre minutes recovered rather quickly in the following weeks.
In recent weeks, we have seen significant time and money spent by many of our high end customers on long overdue vacationing.
Which shows the high discretionary spending available.
This will be dedicated to online shopping on their return.
Of course, there are ongoing concerns about energy prices inflation in March an economic slowdown the return of Covid.
Our new geopolitical tensions.
However, we believe the high end digital luxury customer.
Sure very agile business model protects us in many ways from these challenges and uncertainties.
Nevertheless, we will monitor any developments and their potential impact on our business.
I want to leave you today with three key messages, allowing you to have a clear view on the strength and health of our business.
First the accelerated growth in our business in the fourth quarter and the strong results for the full fiscal year 2020 to show the consistency and strength of my two reason.
This can be seen in our outstanding Kpis for fiscal year 2022, demonstrating our excellence in execution.
Second the amount and quality of brand collaborations and money can buy experiences in the fourth quarter underline our unique luxury positioning and ability to excite our customers and build long lasting relationships, which drive profitable.
LTE in China.
We have put many actions in motion in the fourth quarter, It will drive sector, leading growth and profitability in the future.
Luxury consumers to online shopping as well as untapped geographic and category growth potential for our business gives us confidence to reiterate our expectations for our medium term growth trajectory of 22% to 25% annually for our business.
Despite short term challenges in the environment.
Let me now comment in more detail on these three key messages for today.
First in the fourth quarter, we grew our gross merchandise value GMB by plus 18, 2% compared to Q4 fiscal year 2021.
This is a clear acceleration versus the Q3 growth rate.
The acceleration in growth in the fourth quarter clearly sets us apart from many other digital platforms in the same period.
For the full fiscal year, our GMB growth reached plus 21, 3% compared to full fiscal year 2021 hour.
Our continued growth momentum on top of extraordinarily strong growth in fiscal year 2021 is evidenced by the high two year growth rate in <unk>, plus 66, 3% in fiscal year 2022 over full fiscal year 2020.
The United States, which is one of our key growth markets showed again, an above average DMV growth with plus 28 zero percent compared to Q4 of fiscal year 2021.
United States accounted for 15, 6% of our total business in fiscal year 2022, compared to 12, 7% in fiscal year 2021.
We drove this growth with an unparalleled number of customer and brand new vendors in the United States in the fourth quarter. Please.
Please see our investor presentation for more details on our events in the United States in the fourth quarter.
I mentioned, our strong kpis before for.
For example, our customer satisfaction reached again, an outstanding level as measured in terms of <unk>. The net promoter score of 83, 2% in the fourth quarter of fiscal year 2022.
Our average order value increased by plus five 2% for the full fiscal year 2022 compared to fiscal year 2021 hour.
Our customer acquisition costs only increased modestly by three 8% in fiscal year 2022, as many other digital platforms struggles to keep cost increases at Bay and.
And finally, we achieved our business growth.
Very healthy gross profit margin, which was four six percentage points higher in fiscal year 2022, compared to fiscal year 2021, driven not the least by our strong focus on full price selling.
All of these kpis demonstrate our excellence in execution.
And we'll talk in a few minutes about hall all.
All of this translated into excellent bottom line results for the fourth quarter and full year two.
2022.
Second the fourth quarter. So a record number of brand collaborations which gives evidence to the unparalleled luxury brand relationships, we have as a business.
We were again able to produce impactful digital content and campaigns that created visibility to our unique high value multi brand customer base that cannot be easily reached by mono brand offering.
Examples from the fourth quarter include the launch of an exclusive 72 piece capsule collection from Belichick Cabana.
Only available on my Teresa.
The exclusive pre launch of the mobile channel result collection Unmiter rate.
And the launch of the exclusive capsule collection from Christian Louboutin My Chili's.
Moreover, we were able to offer our top customers Shaw money can't buy experiences in collaboration with major luxury brands.
Example, being the global exclusive partner to launch the <unk> collection, we hosted together with Pucci and three day events uncapped way together with the designer.
To celebrate the launch of an exclusive capsule collection and the 10 year diversity of the brand we hosted a call.
Two day event in Sorrento multi pulls together with the designer.
And as another example to celebrate the exclusive launch of Big escape Resort collection, we hosted with Valentin with two day event and sound opaque.
Please see our investor presentations, we're even more details on our brand collaborations and experiences in the fourth quarter of fiscal year 2022, no. Other platform can offer its top customers such amazing experiences that excite the best customers and dry.
Their loyalty.
We have seen clearly improving repurchase rates in the fourth quarter for customer cohorts first acquired in Q2 of fiscal year 2022, compared to customer cohorts first acquired in Q2 of fiscal year 2021, and the negative impact of the war in Ukraine and large diminished.
The average spend per customer grew by plus five 8% in the fourth quarter of fiscal year 2022, compared to Q4 fiscal year 2021.
And particular focus of our business our top customers.
They give the almost 100% revenue retention from the year two onwards for newly acquired customer cohorts.
Our top customer base grew by plus 22, 1% in the fourth quarter of fiscal year 2022, compared to Q4 fiscal year 2021.
To engage and serve our top customers, we have again growth our team of personal shoppers around the world.
This allowed us to organize multiple intimate top customer styling events globally.
The clear focus on high end customer engagement is ultimately the key reason for luxury brands to continually intensified our partnership with us.
Sure.
Fourth quarter saw several key milestones that will allow us to drive significant growth for our business in the future.
The fourth quarter, we had successfully transitioned six brands to our accumulated platform model CPM.
This model allows us to curate and serve our customers as we do under the wholesale model.
Inventory ownership remains with the brands, which allows for better inventory management and control for that.
Now with a significant part of our total business being run on the basis of the CPM. It is evident that it does not have negative impact on profitability, but to the contrary CPM open up significant growth opportunities for us.
Please see the investor presentation for more details on the financial impact of the CPA.
In May 2022, we successfully launched our four main category called life. In addition to our women's wear menswear and kits were offering on <unk>.
Life offers our high end luxury customers.
Q rated offer.
And lifestyle.
We launched with a curated set of 50 plus brands across categories, such as tabletop furniture glass mat and Vegas, as well as travel and pet accessories and other lifestyle products.
The offer combined fashion luxury brands, such as Gucci Deutsche in Gabon, a condom and Mitsui with true lifestyle brands such as <unk>.
GE normally.
Let's see.
Or is the balance.
With this category, we can drive further share of wallet penetration with our best customers.
Already in June we were able to launch some very exciting brand collaborations on bi.
We launched an exclusive pop up with luxury luggage brand removal and where are they exclusive launch partner for their new quartz collections.
Also in June we had the exclusive launch of Gucci pets collection on <unk> com.
With like monetary solidifies its positioning as the luxury shopping destination for high end customers.
Q1 also marked.
The on time completion of the first building phase for our new central warehouse and light.
The expected completion in fiscal year 2020 for the new warehouse will not.
Right and that capacity is at 55000 square meter of building space for the future growth of our business, but it will also dramatically improve customer service. Thanks to its unique location and direct adjacency to the international Airfreight hub of DHL.
We will benefit from significantly later cutoff times for international deliveries additional slight options to the United States and faster return processing from customs destinations.
In July we also announced the addition of a new President for China, and Asia Pacific to own organization with Stephen Ju Steve.
Steven will drive the expansion of our team in Shanghai as well as more localized customer engagement in the region.
Despite the decrease of large scale COVID-19 related lockdowns mainland China <unk> grew by plus 22, 5% improved fiscal year 2022 compared to fiscal year 2021.
All of the recent actions just mentioned support our long term GMB growth.
Be it by regional expansion category expansion or share of wallet penetration of existing customers.
This comes on top of course, the continued shift of luxury consumers to online shopping.
Bain in Atacama predict that by 2025 still only 30% of the personal luxury goods spend will be online.
With all of the above it should come as no surprise, but we strongly believe in the medium term growth trajectory of 22% to 25% annually for our business. Despite the short term challenges in the current environment.
We are very satisfied with our performance in the fourth quarter of fiscal year 2022, and for the full fiscal year 2022, we believe that our results demonstrate the fundamental strength and consistency of our business model delivering profitable growth.
We see ourselves as one of the few winners in the clearly consolidating luxury e-commerce space.
The combination of best brand partnerships and best high value wardrobe building customer base gives us full confidence to continue achieving outstanding results in the future.
And now I hand over to Martin to discuss the financial results in detail.
Thank you Michael.
I will now review the financial results for the fourth quarter and full fiscal year ended June 32022, and we will provide additional details on some of the previously mentioned factors influencing our performance.
Yes, otherwise stated all numbers referred to the euro.
Jim.
The fourth quarter running from April to June .
$196 7 million.
18, 2% increase from 106 to $6 4 million in the prior year quarter.
For the quarterly growth rate of 18, 2%, we were able to report again, a strong two year growth rate at 6% to four 9%.
Fully in line with the two year growth rates of preceding quarters.
65% and 68%.
The consistency in our top line growth.
As further evidenced by our three year growth rate of the quarter at 94, 3%.
For the full fiscal year 2022, <unk> was at $747 million.
A strong growth of 21, 3%.
At constant currency.
<unk> growth for the full year would have been at 25%.
This small difference is due to the fact that less than a third of our revenues are dominated in currencies other than the euro.
And with that our exposure to FX fluctuations is limited.
As a reminder, <unk> is one of our key value drivers as it shows the depth and growth of our customer relationships.
The fourth quarter, we delivered a strong GMB due to robust new customer growth and strong existing customer cohort performance.
Customer engagement and retention.
We need to grow as our active customers, who shop with us in the last 12 months grew.
<unk> grew by 16, 4% to 781000.
On a two year basis LTM active customers grew 61%.
The robust two year growth rate in active customers and higher retention.
Speaks to our unique positioning attracting a highly valuable multi brand customer.
That appreciates our excellent service.
During the fourth quarter net sales increased by $12 5 million or seven 7% year over year to $174 8 million.
For the full fiscal year 2022, net sale was at $619 million.
Plus 12, 7% compared to fiscal year 2021.
As mentioned before net sales are impacted by brands transitioning to our curated platform model.
Before the transition.
And in the wholesale model net sales is equal to <unk>.
After the transition and in the curated platform model.
Net sales is equal to the platform fee.
Due to the onetime effects of selected brands transitioning from the wholesale model to our Q&A platform model the.
The increase in net sales is lower than the increase in <unk> in the quarter.
The difference in growth rates between <unk> and net sales is purely a one time financial accounting effect.
As for the CPM brands, we now book the platform fee as net sales.
12 months after the full transition of those brands.
This one time effect will be over.
And net sales will grow in line with <unk> again.
As planned in the fourth quarter.
Six of the major brands, we're operating seamlessly under CPM.
We are in a great position to offer both models and our interaction with clients.
As mentioned before in the fourth quarter, we once again saw significant growth in many regions of the world The U S.
<unk> remained a top growth region with 28% GMB growth.
Paired to the prior year quarter mainland China grew by 22, 5% in fiscal year 'twenty two.
Despite the regional COVID-19 Lockdowns.
Our total orders shipped in the last 12 months increased by 17, 2%.
The $177 million.
Return rates LTM were stable and our aot LTM increased by five 2%.
Now 626 Europe .
One of the highest in the industry.
Reported gross profit of.
Of $94 $8 million in Q4 increased by $17 4 million or 22, 4% year over year, even stronger than our GMB growth.
The gross profit margin.
<unk> 54, 2% improved by 650 basis points compared to the prior year period up 47, 7%.
Driven by our growing share of CPM revenues are.
The higher shelf countries with prepaid judy's charge to the customer.
Year end accounting effects as always.
Out of the 650 basis points increased 290 basis points originate from the CPM effect.
The underlying operator gross margin remained stable.
Reflecting the ongoing focus on full price.
Consistent with the high end position of my trees.
For the full fiscal year 2022, <unk> achieved a gross profit of $355 million, an increase of 23, 7%.
Compared to the fiscal year 2021.
The gross profit margin for the full fiscal year 2022 increased to 51, 5% compared to 46, 9% for the full fiscal year 2021.
Mostly due to the before mentioned CPM effect.
Also for the full fiscal year, the underlying operator gross margin remained absolutely stable.
The sustained stability in our operating gross profit margin.
The past five years underlying our unique positioning in the market maintaining full priced selling and our ability to achieve a strong topline growth without.
Without compromising on customer quality.
Shipping and payment costs increased by $7 5 million to $27 1 million in the quarter driven.
Driven by an increase in total order ships.
As a percentage of GMB shipping and payment costs in the quarter increased to 13, 8% from 11, 7% in the prior year quarter.
This increase up 210 basis points is mostly driven by increasing share of countries, where we pay all customs duties for the customer such as the U S.
As mentioned before the payment of these duties as reflected in our prices and therefore increases our gross profit margin in respective countries at the same amount.
If you exclude GDP costs.
The shipping and payment cost ratio in relation to the GMB was stable at.
At nine 3% versus 9% the previous year quarter.
For the full fiscal year 2022.
The shipping and payment cost ratio in relation to GMB was at 13, 1% versus 11, 6% in fiscal year 2021.
If you exclude the DDP costs.
Shipping and payment cost ratio in relation to Jimmy also for the full fiscal year was stable at eight 9% versus eight 6% in the previous year.
Despite increasing internationalization and cost pressures on logistics, we were again able to keep this ratio stable.
During the fourth quarter marketing expenses increased to $26 6 million compared to $22 3 million in the prior year quarter due to the number of new customers acquired.
As a percentage of DMV.
Marketing expenses were stable at 13, 5% compared to 13, 4% in the previous year quarter.
For the full fiscal year 2022.
The marketing cost ratio was stable at 12, 9% compared to 13, 2%.
In fiscal year 2021.
Despite a strong increase in active customers.
With very good customer cohort performance My Teresa was able to once again keep the marketing cost ratio stable in the quarter and for the full fiscal year.
Adjusted selling general and administrative expenses grew by $2 6 million or 10, 6%.
$26 7 million in Q4.
Adjusted SG&A expenses as a percent of GMB decreased by 90 basis points to 13, 6% from 14, 5% due to cost shifts between quarters in the previous fiscal year.
For the full fiscal year 2022.
The adjusted selling general and administrative cost ratio was stable at 12, 8% compared to 12, 7% in fiscal year 2021.
Despite a ramp up of a couple of company cost, we achieve cost leverage and personal expenses and were able to keep the adjusted SG&A expenses in relation to <unk> stable.
Okay.
Adjusted EBITDA in Q4 for fiscal 2022.
Was $13 8 million as.
As compared to $11 2 million in the prior year quarter.
The adjusted EBITDA margin.
At seven 9%.
<unk> was six 9%.
The previous year quarter.
This was a remarkable 100 basis points increase in profitability. Despite all the margin and cost pressures in the market.
For the full fiscal year 2020 to mitral.
<unk> achieved an adjusted EBITDA of $66 3 million.
Compared to $54 9 million.
In fiscal year 2021.
And thus representing a significant growth of 27%.
For the full fiscal year, the adjusted EBITDA margin increased to nine 6%.
From nine 7% in the previous fiscal year.
The strong adjusted EBITDA margins shows the strength and resilience of our business model.
And we continue to deliver an industry leading performance.
Top and bottom line.
Which is a true exception in the industry.
Depreciation and amortization expenses were.
Relatively stable at $2 4 million or one 2% of <unk> compared to the prior year period at $2 1 million or one 3% for.
For the full fiscal year this expense ratio in relation to <unk> stayed stable at one 2%.
The resilient profitability of our business model is also visible on operating income level.
For the fourth quarter fiscal 2022, Mitra recently reported and adjusted operating income of $11 4 million.
Compared to the $9 1 million in the previous year quarter.
This represents a strong growth up 25, 4% in the quarter.
Our adjusted operating income or EBIT margin and this quarter was at six 5%.
90 basis points higher than the previous year quarter.
For the full fiscal year 2022, we achieved an adjusted operating income.
$57 2 million compared to $46 7 million in fiscal year 2021, and thus also representing a significant growth of 22, 6%.
For the full fiscal year, the adjusted EBIT margin increased to eight 3%.
From seven 6% in the previous fiscal year.
To consistently report an EBIT margin at 8%.
It is also remarkable.
<unk> achieved this strong profitability also on adjusted net income level.
Adjusted net income this quarter was $11 8 million as compared to $7 6 million in the prior year period, representing an increase of 55, 1%.
Adjusted net income for the full fiscal year 2022 was at $44 5 million compared to $32 1 million in fiscal year 2021, an increase of 38, 6%.
This translates into a strong adjusted net income margin of six 5% for the full fiscal year 2022.
Also on adjusted net income level, we have.
Have generated a multiyear track record of continued and resilient performance.
We focus on continuously delivering profitable growth.
Which is clearly visible in our very simple and transparent P&L.
EBITDA adjusted EBITDA, adjusted operating income and adjusted net income and the related margin percentages are non <unk> measures.
Moving to the cash flow statements.
During the 12 months ended June 32022.
Operating activities generated $55 million positive operating cash flow.
Driven by our strong operating profitability and a decrease in owned inventories due to brand switching to CPM.
Net increase in cash and cash equivalents was at a strong $36 8 million.
To be able to report a positive operating and free cash flow in fiscal 2022.
Also sets us apart from most players in the industry.
And underscores that might result.
Operator, a superior capital light model.
This is also reflected in the continuous increase in our adjusted return on capital employed.
For fiscal year 2018 to fiscal year 2022.
We continuously increased and now has doubled the adjusted ROE seat to a high 28, 6%.
In fiscal year 2022.
For more information please have a look at our investor presentation.
<unk> has a multiyear track record of running a high return and capital efficient business model.
We ended the quarter in a strong financial position.
With cash and cash equivalents of $113 5 million.
No bank debt.
And total unused availability under the revolving credit facility of $60 million as of June 32022.
Turning now to our expectations for the current fiscal year ending June 32023.
Most of the unprecedented overall market challenges of the past quarters are still intact.
We're in the middle of Europe , pensions are off Taiwan, Covid restrictions in Asia and predominant inflationary pressures.
It may also affect online luxury sales of high net worth individuals but to a much lesser degree.
Even in these times <unk> has shown a strong topline and a highly resilient bottom line performance.
But we also want to guide with Prudence as the situation is less predictable.
Therefore, our guidance for fiscal year 'twenty three is <unk> and.
In the range of $865 million to $910 million we.
Representing 16% to 22% growth.
Net sales of 755 million $800 million.
Representing 10% to 16% growth.
Gross profit.
At $410 million to $435 million growing in line with <unk> also representing 16% to 22% growth.
And adjusted EBITDA in the range of $68 million to $76 million.
And then adjusted EBITDA margin between nine.
And nine 5%.
The current unprecedented uncertainties and challenges in the environment will be overcome and elderly already next year.
As in the past.
The high end customer will bounce back the fastest.
Therefore.
And we clearly outlined this in our investor presentation as well we confirm.
Our medium term targets.
Continue to target annual GMB growth of 22% to 25% medium term.
Also targeted adjusted EBITDA to grow 20% to 25% per year in the medium term with a slightly increasing adjusted EBITDA margin around 9% to 10%.
In the long term with.
And with a higher share of existing customers in our <unk> we.
You will be able to reduce our current 13% marketing spend of GMB substantially.
While still creating impactful experiences for our customers.
And positioning ourselves for a higher adjusted EBITDA profitability level longer term.
We are very satisfied with our performance during the fourth quarter.
We are proud to targeted performance levels for this fiscal year on top and bottom line that is exceptional and unparalleled in the industry.
It builds on <unk> unique.
An undisputable leadership position in the online luxury market and its proven business model with a multi year track record.
I'll now turn the call back over to Michael for his concluding remarks.
Thank you Martin.
We are very pleased with the fourth quarter and full fiscal year earnings results.
See ourselves perfectly positioned to take advantage of the ongoing shift to online and luxury spend.
The continued consolidation and digital platforms and the global market share expansion opportunities.
We are confident that <unk> offers high value consumers the best multi brand digital shopping experience there is.
And with that I'd like to ask the operator to open up for your questions.
Thank you Anthony we would like to register a question. Please press star one on your telephone keypad.
To ask a question. Please ensure you Amit it lately.
Okay.
Please kindly only ask one question and one follow up to allow others the charms.
So thats star followed by one on your telephone keypad to register a question.
Our first question is from Matthew boss from Jpmorgan Matthew Your line is open. Please go ahead.
Great Thanks, and congrats on a nice quarter.
So Mike. Thank you Ma'am you cited in the release you.
You cited in the release that clearly consolidating luxury e-commerce space, maybe could you elaborate on the consolidation that you're seeing in the industry and what gives you confidence in my <unk> unique positioning and business model to take market share over time.
Sure I mean, we have.
<unk> been saying for quite a while that we fundamentally see two models based on customer demand. One is the queue rated multi brand.
And the other is the marketplace.
And what we believe we see is that around these two positions there is consolidation.
There is clearly in the marketplace player like Farfetch, who has successfully consolidated at this meeting.
See ourselves.
The leader in the multi breath to rates and I think there is consolidation in terms of financial performance and in terms of customer feedback, we do see ourselves as.
The best placed in multi brand curated offers and that these two models exist.
As by customer demand. So this is not.
Our business model discussions and understanding of customer needs.
We always believed there will be consolidation of the pandemic seems to have accelerated this.
Great and then maybe just a follow up could you speak to trends that you've seen maybe across regions or categories. In the first quarter to date and just what are your expectations for luxury e-commerce growth in 'twenty three that supports your above market GMP guidance for this year.
So in terms of trends.
June July August heavily heavily influenced by vacationing. So we continue to have strong sales in swimwear outerwear.
Resort vacation there. So these were very strong.
Continued way into.
Into into the late summer and thank all of our core customers did double or triple the vacationing, we did before and we were right on mood with many of our exclusives. Many resorts connections now.
We see the swing back to what we already saw in spring, which is <unk> parties social gatherings.
You go across regions of course.
China to some extent Korea still.
Now again.
More.
Let's first have less party at least regionally driven.
Driven by Lockdowns by by restrictions.
The outcome of this is clear whenever this is overcome.
It will again have the same trend as we saw in the U S and Europe people will make up for that.
<unk> continues to be very strong in Europe .
Since sort of at least sentiment wise.
More on the continent.
As has been digested.
Exist, but in terms of customer sentiment we've seen.
Back to normal.
23.
Fully accept there are lot of uncertainties out there challenges, but at least for those that we know today, we believe our focus on the high end of our focus on luxury our focus on the on an agile business model allows us to address some of those challenges.
That's great color best of luck.
Thank you our next.
Question is from Oliver Chen from Cowen. Your line is open. Please go ahead.
Hi, Michael Martin Great results are Cowen data is showing increasing pressure at the high end and the investor concern.
It's definitely around higher energy costs in Europe .
So would love your thoughts there.
And should you have been more conservative given so many unknown variables also you had very impressive full price selling.
What does your guidance assume for promotions.
More broadly concerns about promotions in the marketplace. However.
Have a unique model with a focus on duration of a very high end customer.
A follow up you added a lot of new customers this quarter.
What are your thoughts on their cohort behavior.
There'll be wanted to honor.
The process for retention and customer lifetime value execution. Thank you.
Thank you all of US So let me address those three so first of all energy.
Okay.
Two ways to look at it what does energy cost us due to our business model.
Very little.
When you look at our results what we have achieved this fiscal year has increased our <unk> again.
Which is quite.
Testament to that we focus on the high end or <unk> is now above 620, we grew it.
Close to 6% if the basket growth to close 6%.
Even the dramatic increase in energy, which then drives shipping cost can be fully digested because on our 600 plus <unk> 626.
That is mitigated fully.
On the consumer side, yes energy prices are going up dramatically and that does impact.
Household income.
Medium.
Tier but the.
The increase in costs does not effect in terms of material.
Meaning to their discretionary spend it just doesn't matter sentiment wise or something else, but it doesn't matter.
On the promotion side.
Promotion is really a result of overstock.
Yes.
And we don't see a huge amount of overstocked at the moment in the market.
Our policy has always been to focus on on free price, we thus have customers that.
Go for newness for the latest four capsules for exclusive is not for the best bargain.
So we also feel we are well prepared should be a return to higher promotional intensity and lastly, cohorts as always and as always explained this is the most important.
Focus on.
Our business is.
The quality of the customers. We acquire is the lifetime development of our customers on par with the past.
I can only report back but also the customers we acquired in Q3 and Q4 show the same pattern as before.
Which is positive.
Right.
Okay.
Thank you our next.
Just a question before we take our next question I would just like to remind everyone to ask a question. Please press star followed by one on your telephone keypad.
And please stick to one question and one follow up.
Our next question is from Matt Tucker from UBS. Your line is open. Please go ahead.
Good thanks.
Thank you for taking the question.
A couple if I could one.
On the GMB growth expectation of 16% according to <unk>.
<unk> grew 16% in the second half of this year. So the 16% is kind of in line with the trend. So the 16% to 22, how do you see that kind of evolving through the year next year.
That's one and settling a follow up on China.
Just trying to understand because.
Most of the other players within the luxury space have kind of said.
China is down or was down last quarter was 30% to 40%.
Are you seeing in terms of not a full year, but for the last quarter.
What are you seeing in China trends. Thank you.
On the first question, yes, it is fixing for the half year, but again I think our momentum is key.
Grew in Q3.
<unk> and we grew in Q4, so we accelerated.
So we have accelerated from Q3 into Q4, and we continue to see that development and therefore, almost 16% to 22 is based on the momentum that has increased.
Since April .
That's number one number two China is difficult to no question about it I mean, driven by large scale lockdowns.
Population sizes of $40 million each.
But again.
China is a huge market China will have the same behavior as other regions as they overcome.
The pandemic, whether they overcome it six months 12 months depends on what programs. They launch the next couple of months, but we are we are.
We are very optimistic in March and I believe we have the number for China, we have grown.
Again in China can you remind us.
Yes.
Hello.
Exactly we also grew strongly in China in Q4, but we give the overall growth rate of China for the full fiscal year and the full fiscal year mainland China grew by 22, 5%.
Great.
Follow up if I if I could.
So just wanted to show you guys come to what are you doing differently versus other folks that you are growing that as they are declining 30% to 40%.
Okay.
I mean.
Two points one.
We have to admit we are by far not as big as some of the luxury brands in China. So we come from a different basis, which means we have a huge opportunity going forward, but then.
One of the key aspects why we as we report today are very confident on the outlook, we focus on the luxury customer.
We focus on the work of building customer, we do not focus on the aspirational luxury customer so China is a gigantic luxury market also because even.
In very younger terms in comparison to euro.
Customers consumers want the luxury back one.
The first purchases to demonstrate social climbing that's why it's a huge accessory market. These are customers that sometimes.
Save money.
Fort themselves for K, five K luxury back that's really an icon for them or social climbing.
That is of course, if if times get tough.
Certainly a customer segment that will postpone delay.
We serve customers to build wardrobes and of <unk>.
Frontier they buy because we reported in the past <unk>. This is really it.
A wardrobe building customer and thus.
We will of course at some point also be affected by economic concerns.
Real estate.
The capital markets, but.
Not at the moment and this gives us.
Stronger installation not only in China across the globe.
We surface different and much more elevated customer based on other platforms.
Great. Thank you so much Mike Thank you Martin.
Thank you.
Next question is from <unk> Singh from Society Generale Open up your line is open. Please go ahead.
Hi, Thanks for taking my question a couple of questions from my side. One is when you see a 16% to 22% growth could you give us some color on like how.
That will.
Get executed like what will it be in terms of basket size or will it be purely in terms of number of customers go something.
And second thing is.
When you talk about the 5% to 6% growth in the average order value for 2022, how much of that was inflation driven.
How much of that was underlying.
<unk> customer basket size.
Oh, yes.
Yes.
Let me start with the second.
The increase in basket value was not item driven but value of item.
So.
It's clearly higher value, but there are two effects in there there is inflation, but inflation is a difficult world works for our type of product because.
80% of what we sell didn't exist last year. So it's a new product and so it is more of that.
A bag.
That was put out last year.
It was maybe a to K and now the new lines of bags.
Super.
2500 that you can really have apple to Apple the items that were produced last year is not as clear in luxury fashion, where products are constantly coming out of new collections, so, but it's more valuable items that we sell thats the driver for that.
And the first.
First question is.
We clearly.
Based on the assumption on the one hand.
Continued increase of spend per customer. This is not just basket. It's just.
Washington, how loyal they are this is one of the one of the drivers that we saw this year was.
Over 5% more spend per customer in our business.
Drive loyalty, we drive average spend of our best customers through personal shopping, but the main driver continues to be new customer acquisition.
Okay. Thank you.
Thank you.
Next question is from Lauren Chung from Morgan Stanley Lauren Your line is open. Please go ahead.
Great. Thank you just two quick.
It's housekeeping question just first on the acceleration.
From the third quarter, thus far is clear I think last quarter, we talked about some.
Some delays in spring delivery timing shifts, which at the time you thought might be here, if our points of growth out of <unk> into for Keith I. Just wanted to confirm that that did happen to that three to four point estimate is still accurate and then just secondly in terms of timing in terms of that the CPM rollout in <unk>.
So consequently any yet.
We're still looking to fiscal 'twenty for the full year. Thanks, so much.
Yes margin can take the second question on the first one.
The delay in deliveries was actually or discussion we had from Q2 to Q3 margins if I believe correctly.
It was a it was between Q3 and Q4.
Okay, Laura slowness right.
Of March to April .
Okay.
Yes.
And yes, so completely right Lauren from Q3 to Q4.
There was a shift there was a bit smaller, but yes that shift in deliveries.
<unk>.
But I mean.
The 3% to 4%.
Basically the inventory shift this cannot be translated into dark sales impact.
Timing of the CPM effect.
We obviously in fiscal year <unk>.
It's running fiscal year 'twenty three.
The big effect of the first expense will be fully digested remember we started with the first brand already in Q1. So July August September of last year.
And so this will the 12 months pro brands when when the full effect is over when the net sales of the brand than increases in line with <unk> again.
So there is shift effects in this running fiscal year.
Off the first Brent and then the following five brands.
There will be one to three additional brands.
Come in this year. So that's why we clearly guided the net sales for this year.
10% to 16% and obviously.
In with this.
With the end of this fiscal year.
Then I mean, those shifts effects for those brands are.
Over and obviously then the net sales growth.
Is it pretty much in line with <unk> the difference between the growth rates is that smaller and smaller.
Okay. Thank you.
Thank you we have no further questions. So this concludes today's call. Thank you for joining you may now disconnect your lines.
Yeah.
Okay.
Yes.