Q1 2025 MYT Netherlands Parent BV Earnings Call
Speaker Change: [music].
Greetings and welcome to the mitral, Russia first quarter of fiscal year 2025 earnings Conference call. At this time all participants are in a listen only mode. Today's call is being recorded and we've allocated one hour for prepared remarks and Q&A. It is now my pleasure to introduce your host Martin.
Beer Mitral research Chief Financial Officer. Thank you, Sir you may begin.
Thank you operator, and welcome everyone to mitral <unk> Investor Conference call for the first quarter.
Fiscal year 'twenty 'twenty five.
With me today is our CEO Mike <unk>.
Before we begin we'd like to remind you that our discussions today will include forward looking statements any comments, we're making what expectations are forward looking statements are not subject to risks and uncertainties, including the risks and uncertainties described in our annual report many factors could cause actual results to differ materially.
No duty to update forward looking statements. In addition, we will refer to certain financial measures not reported in accordance with Iff's on this call you can find reconciliations of these non <unk> measures in our earnings press release, which is available on our Investor Relations website.
Investors Docs, Microsoft Dot com.
Mike: I will now turn the call over to Mike.
Mike: Thank you Martin also from my side, a very warm welcome to all of you and thank you for joining our call.
Speaker Change: You didn't comment today on the results and performance of our first quarter of fiscal year 2024.
Speaker Change: As you can imagine we are very excited about the recently announced expected acquisition of wine.
Speaker Change: As explained in our Investor call This acquisition.
Speaker Change: Will allow us to create a global digital luxury platform across multiple highly distinguished storefronts.
Speaker Change: We believe we will be able to generate significant synergies and using adjoins backbone.
Most importantly, we will have an overall value proposition.
Speaker Change: The highest relevance for global luxury shoppers and brands.
Speaker Change: We expect closing of the transaction in the first half of calendar year 2025.
Speaker Change: As we wait for the transaction to close it is of course, our sole focus to keep the strong momentum in our business and to continue to show that our business model and economic model delivered strong results despite ongoing macro headwinds.
Speaker Change: We are therefore very pleased with our results in the first quarter of fiscal year 2024 months.
Speaker Change: With the strong revenue growth and positive adjusted EBITDA. We continued our very positive business momentum that we have seen since the third quarter of fiscal year 2024.
Speaker Change: We have solidified our leading position in the clearly consolidating sector and displayed our unique characteristic of trust with total growth in the sector.
Speaker Change: We still see lower demand from aspirational customers and promotional intensity by competitors in the market, but we have also seen market conditions improved in recent months.
Speaker Change: We strongly believe that we will benefit from this trend over the next quarters over proportionally.
Speaker Change: Our strong growth with top customers our <unk>.
Speaker Change: Our record high average order values, our improved gross margin and the excellent customer satisfaction scores all highlight the fundamental health of our business.
I wish to highlight today's three key messages to you that make us stand out in the first quarter and demonstrate the strengths of the Mighty <unk> business, despite ongoing macro uncertainties.
Speaker Change: First our unique focus on big spending won't drop building luxury suffers drove again, our profitable business with our top customers.
Speaker Change: And the desire of luxury brands to partner with us.
Speaker Change: We built a community for true luxury enthusiasts and create desirability through unique physical experiences.
Speaker Change: Second the strong relationships and support from all our brand partners allowed us to feed show once more mainly exclusive capsule collections and campaigns that drove our global business growth, particularly in the United States in the first quarter of fiscal year 2005.
Speaker Change: Third our very resilient and consistent business model allowed us to significantly improve many of our key performance indicators in the first quarter of fiscal year 2005. Our recently published positive change reports for fiscal year 'twenty. Four also showed our.
Speaker Change: Progress along our commitments to being a sustainable and socially responsible corporation.
Speaker Change: Top customer growth and loyalty.
Speaker Change: Global presence and growth as well as excellent operational performance continue to set us apart from other players in our sector.
Speaker Change: Let me now comment in more detail on these three messages.
Speaker Change: First let's look how building a global community for luxury enthusiasts is driving our business.
Speaker Change: First quarter, our <unk> was top customers grew by plus 18, 8% compared to Q1 fiscal year 'twenty for this.
Speaker Change: This excellent growth was largely driven by an increase of the average spend per customer in terms of dnb by plus 16, 7% in Q1 fiscal year 'twenty five versus Q1 fiscal year 'twenty four in.
Speaker Change: In the United States, our business with our top customers even grew by an outstanding plus 49%.
Speaker Change: This was driven both by an increase in the top customer base of plus 26% in the first quarter as well as an increase of the average spend per top customer by plus 16, 9% compared to the first quarter of fiscal year 2024.
Speaker Change: Our clear ambition is to build the strongest relationships with our top customers.
Speaker Change: And we therefore constantly engaged with them.
Speaker Change: In the first quarter, we hosted again various events for our top customers across the globe.
Speaker Change: Examples included style suites in London, Milan product, New York, Singapore, and Hong Kong.
Speaker Change: Also invited top customers to the Deutsche in Gabon, a beach club and central pain in my base over this summer.
Speaker Change: In collaboration with <unk>, we hosted menswear Evans in Munich, and New York.
Speaker Change: We also invited our top customers to be spoke fine jewelry events, and Munich, Los Angeles and Shanghai.
Speaker Change: Finally, we partnered with Porsche to host top customers for a Porsche driving experience in Los Angeles.
Speaker Change: Please see our investor presentation for more details on our various top customer events.
Speaker Change: To fulfill our ambition to build a community for luxury and users through digital and physical experiences we bring together our top customers amazing surely money can't buy experiences.
Speaker Change: The first quarter, we invited guests to an intimate dinner with the designer Simone Russia.
Speaker Change: Last year's Claridges in London, featuring mesmerizing culinary installation by Layla go.
Speaker Change: We hosted a supper club evening was the designer Gabriela Hearst at the iconic club literally stalled after dark in Paris to.
Speaker Change: To celebrate Paris fashion week.
Speaker Change: We created an unforgettable two day experience together with cuts in Milan to celebrate the launch of exclusive styles from the tough spring summer 'twenty five women's wear collection.
Speaker Change: Over two days, our guests were invited to various unique moments starting with a behind the scenes tour at the prestigious scholar than attending the wonderful ballet Lockdown will calculate.
Speaker Change: Owed by a dinner after the performance served actually inside this column.
Speaker Change: The next day, our guests participated in a private tour of Leonardo da Vinci masterpiece, the last supper, and we concluded with the launch.
Speaker Change: So marino bolstered by the mayor of Mena.
Speaker Change: Another example for our money can't buy experience was a two day experience in collaboration with the famous back Brian does Rome, and Brussels, including a tour of the Mozilla Beautiful Dana hosted insight the workshop.
Speaker Change: <unk> workshop for our customers in the low <unk>.
Speaker Change: And lunch on the tariffs.
Speaker Change: <unk> flagship boutique.
Speaker Change: In the United States, which remains a key driver for our growth we hosted an intimate cocktail of Kathy Hilton residents in Bel Air together was designed as a backup balance and Nicky Hilton to celebrate the launch of the Nicky Hilton for Rebecca Valens holiday collection.
Speaker Change: Guests attending this event included Paris, Hilton and Chris Jen.
Speaker Change: In addition to providing our top customers memorable experiences such events also create global brand awareness for Mitel Arena through press and global social media amplification.
Speaker Change: Please see our investor presentation for more details on these unique money can buy experiences.
Speaker Change: Second the first quarter, so again, mainly high impact campaigns and exclusive product launches.
Speaker Change: It drove our global business with high spending wardrobe building customers.
Speaker Change: We launched exclusive women's wear and menswear styles from Lovaza and Montclair only available at Mitel laser as well as the exclusive Chloe evening Blue capsule collection for womens were only available at Mitel.
Speaker Change: We will also exclusive prelaunch partner for the Blake back of the role and for the women's wear fall winter 2000, and for runway collection of Gucci as well as the women's wear fall winter 2004 collections of tops, <unk> and GMO sheet, providing my Teresa customers exclusive first.
Speaker Change: Access to these new collection pieces.
Speaker Change: Please see our investor presentation for more details on our brand collaborations in the first quarter.
Speaker Change: Such unique offers drove the interest by wardrobe building big luxury spending.
Speaker Change: And thereby our strong top line in the first quarter of fiscal year 2025.
Speaker Change: We grew our <unk> by plus six 3% compared to Q1 fiscal year 'twenty four.
Speaker Change: Being fully on track with our outlook for the full fiscal year 2025.
Speaker Change: In terms of net sales, we achieved a strong growth of plus seven 6% compared to Q1 of fiscal year 'twenty for <unk>.
Speaker Change: It states continues to be a significant growth driver for our business, we saw double digit growth with plus 13, 6% in Q1 fiscal 'twenty five.
Speaker Change: And the U S accounted for 20% of the <unk> of our total business in the first quarter of fiscal year 'twenty five.
Speaker Change: This demonstrates that our highly curated selection of true luxury brands resonate very well with the big spending U S luxury shoppers looking for multi brand inspiration.
Speaker Change: In Europe, we also experienced net sales growth was plus nine 8% in the first quarter compared to the first quarter of the previous year.
Speaker Change: Results in China, and Asia continued to be impacted by ongoing macro headwinds and uncertainties.
Third in the first quarter of fiscal year 2025, we significantly improved our business performance, thanks to our very resilient and consistent business model.
Speaker Change: Martin will talk in a few minutes about the details of our bottom line results for the first quarter.
Speaker Change: But let me provide you with some key operational highlights.
Speaker Change: We achieved excellent customer satisfaction measured by our internal net promoter score that reached an outstanding 82, 6% in Q1 fiscal year 'twenty five demonstrating the consistent excellence of our customer service proposition.
Our LTM average order value increased significantly by plus nine 1% to renew record high of euros 720 in Q1 fiscal year 'twenty five demonstrating the success of our focus on selling high end luxury products two top customers.
Speaker Change: Furthermore, our return rate decreased in the first quarter and our cost ratios also mostly improved.
Speaker Change: All of these operational highlights underlined the fundamental health of our business.
Speaker Change: Another important update I wish to mention is that Mitel is a published its third positive change report highlighting the progress toward our defined ESG commitments in fiscal year 'twenty four.
Speaker Change: Notable achievement in this report is the strategic partnership with DHL for the go Green plus initiatives financing the use of sustainable aviation fuel to reduce our C. O two emissions associated with shipments by more than 27000 tons.
Speaker Change: Over five years.
Speaker Change: Further key highlights include the start of our partnership with <unk> to assess risks within our supply chain achieve.
Speaker Change: Achievement of a share of 69% women in leadership positions at Mitel laser.
The successful training of more than 600, new join us on our DN Eni commitments.
Speaker Change: And the extension of our partnership for reselling Preloved items with <unk> collective to all our customers in Europe, the UK and the U S.
Speaker Change: Please see our investor presentation for more details. The Mitre is a positive change report for fiscal year 2004.
Speaker Change: With all of the above it should come as no surprise that we are very pleased with our performance in the first quarter of fiscal year 2025.
Speaker Change: We see this quarter is further proof that our business can deliver profitable growth even on the ongoing macro uncertainties.
Speaker Change: Due to the strength of our model and consistency of our execution.
Speaker Change: We clearly see ourselves as a winner in the consolidating luxury e-commerce space.
Speaker Change: We are extremely well positioned to benefit from the tremendous growth prospects as market conditions continue to improve globally.
Speaker Change: The expected acquisition of wind that will of course provide even more opportunities for profitable growth.
All of this and the results of the first quarter support our strong confidence in our medium term growth trajectory.
Speaker Change: And profitability targets.
Speaker Change: And now I hand over to Martin to discuss the financial results in detail.
Martin: Thank you Michael I'm also truly excited about our acquisition of <unk> and.
Martin: And we will provide a more in depth view on the performance and our plans for the future after closing.
Martin: I will therefore focus this call on the financial highlights.
Martin: Highlights of our first quarter of fiscal year 'twenty five ended September 32024.
Martin: The first quarter showed a continuation of improved top and bottom line performance that we experienced in the course of fiscal year 'twenty four.
Martin: Net sales growth was up plus 8% in the quarter and we improved our profitability at adjusted EBITDA level by 200 basis points year over year.
Martin: Main driver of this increase in profitability was 150 basis points higher gross profit margin.
Martin: In contrast to the previous quarters and despite persistent uncertainties in the overall luxury market, we were able to not only stabilize the gross profit margin slippage.
Thus to initiate their recovery.
Martin: In addition, we successfully continued to rebalance inventory levels with sales volumes.
Martin: With a decrease of inventory by minus three 6% year over year.
Martin: We have now already reached our target inventory levels in relation to topline performance.
Martin: We are fully on course, with our performance improvements and our flexible and robust business model and we will continue our track record of strong and profitable topline growth.
I will now review the financial results for the first quarter of this year, 25% ended September 32024 in more detail and give additional color on certain key developments affecting our performance.
Martin: Unless otherwise stated all numbers referred to Europe.
Martin: In Q1 fiscal year 'twenty five running from July to September net sales increased by $14 2 million to $201 7 million, a plus seven 6% increase year over year.
Martin: On a two year basis net sales increased by 15, 1%.
Martin: And plus 28% on a three year basis.
Martin: <unk> increased by plus six 3% or $12 8 million to $216 6 million.
Martin: As compared to $203 8 million in the prior year quarter.
Martin: We continue to attract and retain the best customer cohorts in the industry.
Martin: <unk> for all customers increased by plus 13, 5% during the first quarter and <unk> top customers increased by plus 16, 7%.
Martin: Our LTM.
Martin: LTM now stands at 720 euros, an increase of nine 1% or in absolute terms.
Martin: <unk> 16 euro per package shipped.
Paired to the prior year periods.
Martin: This increase as our track record of continuously expanding our lv and thus improving our unit economics.
Martin: It also demonstrates our successful focus on full price selling.
At the very high end of true luxury.
Martin: We continue to manifest our leadership position in all regions of the world.
Martin: Especially in our core markets Europe, the U S and middle East.
Martin: The U S showed against strong revenue growth of plus 13, 6%.
Martin: And the number of top customers grew by plus 21%.
Martin: In the first quarter of fiscal year 'twenty five gross profit increased by 11, 5%.
Martin: So $88 6 million as compared to $79 $5 million in Q1 of the preceding fiscal year.
Martin: The gross margin stood at 43, 9%.
Martin: An increase of 150 basis points.
Martin: As compared to the prior year period.
As mentioned before we successfully stabilized across corporate margin slippage that we experienced in previous quarters.
This quarter, we were able to already show improvements.
While we still experienced some effects of promotional activities from competitiveness in the market.
Martin: We were able to clearly demonstrate our success and not following that route.
Martin: With our unique duration increased brand support and focused on full price selling.
Martin: We continue to achieve high full price sell through rates.
Martin: Resulting in improved gross profit margins during the quarter.
Martin: The adjusted shipping and payment cost ratio decreased by 40 basis points. During the first quarter now standing at 13, 5% as compared to 13, 9% in Q1 of fiscal year 'twenty four.
Martin: This improvement is a result of our unique customer focus with improved <unk> decreasing return rates.
Our continuous efforts on implementing efficiencies in our global shipping customs and payment setup.
Martin: We continue to be mindful of the overall softer market environment and focus our marketing efforts on high potential.
Martin: During Q1 of fiscal year, 'twenty, five marketing expenses only increased modestly by $1 3 million to now $25 million.
Martin: The marketing cost ratio remained stable at 11, 5% of <unk> as compared to 11, 6% in the prior year period.
Martin: The adjusted selling general and administrative SG&A costs only increased modestly.
Martin: Zero point $8 million year over year.
Martin: With that.
Martin: Our adjusted SG&A cost ratio decreased.
By 50 basis points.
Martin: 14, 5% in the prior year quarter to now 14.0%.
Martin: We are fully closed down our legacy distribution center.
Martin: And moved all operations successfully to our new distribution center in Lansing.
Martin: Mostly due to our position of lineup, we incurred an adjusted $21 3 million of transaction related to certain legal and other expenses in the quarter.
Martin: In the first quarter of fiscal year 'twenty five adjusted EBITDA increased by $4 1 million to $2 9 million.
Martin: Just the EBITDA margin increased by 200 basis points to one 4% during the quarter driven by the increase in the gross profit margin.
Martin: And improvements in other cost lines.
Martin: The improved performance is in line with our expectations and the guidance for the full fiscal year.
Martin: Depreciation and amortization were up $7 1 million.
Martin: $3 7 million above previous year.
Martin: Due to a $3 1 million one time write off of our remaining warehouse installation in our legacy distribution center in <unk>, which we closed end of August.
Martin: Profit improvements in Q1, we're also visible at adjusted operating and net income level.
Adjusted operating income increased by $3 5 million adjusted net income increased by $8 6 million adjust.
Martin: Adjusted net income in the first quarter was at a positive $5 4 million or two 7% of net sales.
Martin: Increasing by 440 basis points.
Martin: Minus one 7% in Q1 of fiscal year 'twenty four.
Martin: Let's move to the cash flow statements for.
Martin: For the three months ended September 30, 24 hour operating cash flow use up $26 7 million. Following a typical seasonal pattern. We have continued to successfully manage our inventory levels and adjusted buying accordingly.
Our inventories decreased by minus three 6% year over year.
And there are even slightly below inventory levels end of June 24, despite the seasonal inventory buildup.
Martin: With that our Kpis days inventory outstanding stands at 253 days at the.
Martin: The end of September already reaching our target level of around 260 days.
Martin: Our cash flow from investing used up only $1 3 million or 0.6% of GMB as we have now completed the remaining payments of our new Leipzig warehouse.
Martin: So stay with our Capex cash flow on average below 1% of GMB is another highlight of the <unk> business model.
Martin: For the three months ended September 30, we finished the quarter with $9 million cash attached.
Martin: With all of the above it comes as no surprise that we're very confident in the success of our unique positioning and business model and.
And we will continue our clear focus on strong and profitable growth.
Martin: We also confirm our guidance for the full fiscal year 2025, with <unk> net sales growth between 7% and 13%.
Martin: And adjusted EBITDA margin between 3% and 5%.
Martin: With expected closing of the acquisition of lineup and H one of calendar 2025.
Martin: Very excited of our medium and long term outlook as we aim to fortify our clear market leadership position in global multi brand luxury set for strong profitable growth and thereby creating significant value for our shareholders and all stakeholders in <unk> and why.
Martin: Sure.
Michael: And with that I will now turn the call back over to Michael for his concluding remarks.
Michael: Thank you Martin.
Michael: We are very pleased with our first quarter of fiscal year 2025 to earnings results.
We see ourselves well on track to achieve our fiscal year 2025 guided targets.
Michael: The first weeks of the second quarter support our confidence.
Michael: We will continue to benefit from the ongoing consumer shift to online and luxury Spence the increasing importance of the highest spending multi brand inspiration seeking customer segment.
Michael: And the desire by brand partners to work with only the best digital platforms in the market.
Michael: We are very confident that <unk> offers investors a great opportunity to participate in these growth trends.
Michael: Was that I ask the operator to open the line for your questions.
Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to one question and one follow up.
Speaker Change: Our first question today comes from the line of Oliver Chen from TD Cowen Your line is open.
Speaker Change: Okay.
Speaker Change: Hi, there. This is Katie hop back on for Oliver Chen. Thank you so much for taking my question and congratulations on the solid.
Speaker Change: First quarter performance I'd like to dig in a little bit around the success.
Speaker Change: With lower return rates can you just speak to the architecture and how much of this is a component of new customers to the platform.
Speaker Change: Success with the product and then I have a quick follow up afterwards.
Speaker Change: Thank you.
Speaker Change: I mean, we have seen.
Speaker Change: Sector for quite.
Quite a while increasing return rates.
Speaker Change: I think there are many hypothesis around it but.
Speaker Change: It's probably also an hypothesis about customers being.
Very picky, and what that really by and the and keep.
Speaker Change: So we see two drivers for that first sign of slightly decreasing return rate in a while one is that.
Speaker Change: There is.
Speaker Change: Slowly, but increasing appetite for.
Speaker Change: For customers.
Speaker Change: To keep Dubai could only to dry and the second part I think you hit the nail is of course, the success with existing customers and success with heavy spending Austin recurring customers is also helping return rates because these customers tend to know their sizes.
Speaker Change: Different brands, they know exactly which shoe size they need from <unk> can be short on Vito so focusing on these high repeat customers also helps on return rates.
Speaker Change: Excellent. Thank you and then.
I would just like to speak a little bit more to the success in the U S.
Speaker Change: It really looks like there's a lot of progress there.
Speaker Change: Could you provide some color.
Speaker Change: <unk>.
Speaker Change: How that quarter.
Speaker Change: <unk> and <unk>.
Speaker Change: If there was any potential noise quarter to date related to Jay.
Speaker Change: The election news or greater.
Speaker Change: Macro uncertainty and how youre thinking about the U S growth for the rest of the year.
Speaker Change: Sure.
Speaker Change: And you're absolutely right the United States has been a great success for us as a company over the last two years our team here in the United States is doing an amazing job.
Speaker Change: One of the Big drivers is of course ongoing the reaching out to clients, making them aware of how offer you will recall, we had over the whole sum up for I think eight weeks of pop up in the Hamptons.
Speaker Change: Generating a completely new cohort of.
Speaker Change: Customers.
Speaker Change: But we continue to have events and thats visible in our Investor presentation Menswear event in New York was fine.
Speaker Change: Fine jewelry event.
Speaker Change: L. A we did a activation was Porsche in L. A was Rebecca of islands, and Nicky Hilton and so the ongoing opt reached the ongoing engagement with top customers.
Speaker Change: <unk> is also driving this because as we always say top customers that bring their friends top customers that invite other people bring us high potential new customers.
Speaker Change: If we look at the U S. Right now, we actually expect a very strong Q2.
Speaker Change: We believe that consumer sentiment in the U S has further improved.
Speaker Change: We had an election, which regardless of the outcome.
Speaker Change: Was decisive so we did not have.
Speaker Change: Hanging result, no one knows who really won it was clear who won.
Speaker Change: And I think that is also removing uncertainty in the market. So we will we expect that the moment continued growth and continued success in the U S will monitor laser.
Speaker Change: Thanks.
Speaker Change: Again, if you would like to ask a question Press Star then the number one on your telephone keypad. Your next question comes from the line of Matthew Boss from Jpmorgan. Your line is open.
Speaker Change: Thanks.
Matthew Boss: Michael how.
Speaker Change: How would you characterize overall health of your core luxury customer today any differences across regions that youre observing in overall spending and maybe by category any notable shifts in category performance that youre seeing so far in the second quarter I know you mentioned.
Speaker Change: Positive progression in the U S.
Thank you Matt.
Speaker Change: I think.
Speaker Change: You are right you have to cut it in different.
Speaker Change: By a different dimension. So let me start with the geography as I said very happy with the U S plus 14% double digit growth continues we see the U S and the U S luxury consumer.
Speaker Change: Good shape.
Speaker Change: Also very happy with Europe, Europe, including Germany grew 9% in the last quarter.
This is an excellent outcome, we had for some time challenges in Europe. So we also believe here.
Speaker Change: Uncertainties have been removed many of the European markets elections have happened.
Speaker Change: And some.
Speaker Change: Our country is actually.
Speaker Change: Good prospects for economic expansion.
Speaker Change: The one geography region that <unk> still lags as Asia, particularly influenced by China. So that's clear.
Speaker Change: Uncertainties and challenges are there. So they are we probably still have to wait for.
Speaker Change: Improvements for continued recovery, but Germany.
Speaker Change: Europe, and U S, which accounts for 70% of our business.
Speaker Change: Are in good shape I would say.
Speaker Change: Terms of the customer groups.
Speaker Change: Yes.
Speaker Change: Our top customers are in excellent shape the expansion of.
Speaker Change: Our business was top customers overall was driven by almost 17% more spend per customer in that group. So it's an amazing increase of the average spend per top customer.
Speaker Change: And in the U S. We not only have this increase of roughly the same 17%. We also added.
Speaker Change: Almost 19% more top customers. So this specific segment that has always been our focus is in very good shape.
Speaker Change: I think the question about the aspirational customer segment.
Speaker Change: We do see <unk>.
Speaker Change: <unk>, we believe we will see a better.
Speaker Change: Christmas business in Q2 is of course in our logic Q2 ways of course quite important for the aspirational customer we didn't see any sort of business of them last year every one sort of skipped their luxury item purchase for next year. We believe there will be some improvements not afford.
Our recovery, but some improvements as consumer sentiment picks up and that of course will also drive a better business and accessories and bags. The main categories driven by of course, our top customer focus continues to be ready to wear continues to be the brands that you can lose sleep put on quite.
Speaker Change: Luxury.
Speaker Change: Continues to be fine jewelry and continuous to be everything connected to vacation.
Speaker Change: We will we at the moment launch beautiful evening at test of ready to wear but beginning of December we will already launch our campaigns for accruals resort because early December our clients will start to think where to go in.
Speaker Change: Jan February be it the Caribbean speed.
Speaker Change: The Mediterranean so that business continues to boom as luxury experiences actually also.
Speaker Change: To show good growth.
Speaker Change: Great and then maybe.
Speaker Change: Follow up from Martin could you just elaborate on the promotional backdrop channel inventory levels today across luxury as we enter holiday and what it means for gross margin in the second quarter and in the back half of the year.
Matthew Boss: Yeah, Matt happy happy to do so exactly I mean, we've talked about that and saw that in the preceding quarters. That's due to heavy promotions. There is continued.
Matthew Boss: Access inventory in the market and that led to a decreasing gross profit margin.
Matthew Boss: And that is with spring summer <unk>.
Matthew Boss: 94, and even more with fall winter 24 season.
Matthew Boss: Less inventory in a market with less promotional pressure overall and we continued to stay very focused to stay true to our focus on full price selling.
And in managing our inventory levels accordingly.
Matthew Boss: So we always followed a balanced approach.
Matthew Boss: Thus this clearly shows in our numbers.
Matthew Boss: On the one side, we stabilized the gross profit margin slippage and reverse that so we showed a very strong increase in the cross profit margin up 150 basis points already in this quarter.
Matthew Boss: And we expect a stabilization and improvement across board margin to continue.
Matthew Boss: For the full.
Matthew Boss: Fiscal year 'twenty five.
Matthew Boss: And that is including the rebalancing of the inventory and two to playing.
Matthew Boss: <unk>.
Matthew Boss: Subtle promotional strategy, but more really focusing on.
Matthew Boss: Sure.
Matthew Boss: Top customers and the quality also on the high potential new customers that we're getting in and that leads to a higher full price share.
Matthew Boss: Sell through rates higher sales margin.
Matthew Boss: And therefore, the overall improvement in the cross profit.
Matthew Boss: And on the same.
At the same time, we were able to to rebalance inventory levels in line with with our topline expectations.
Matthew Boss: No.
Matthew Boss: I called out that inventory levels.
Matthew Boss: Our now minus three 6%.
Matthew Boss: Compared to a year over year, despite the growth.
Matthew Boss: And also are below slightly below the June.
Matthew Boss: Inventory figures, despite the seasonal inventory buildup, so very stable healthy development exactly as we as we expected as we planned for.
Matthew Boss: And this enabled the Dio days inventory outstanding to be now at 253 days.
Matthew Boss: Four.
Matthew Boss: Our target level is always to be around 216, obviously, there will be fluctuations.
Matthew Boss: In the coming quarters.
We expect the overall fiscal year also to end up around the two.
Matthew Boss: 260 days inventory stabilization on the inventory levels, we reached that target.
Matthew Boss: Managed quite successful inventory levels.
Matthew Boss: <unk> achieved that with a balancing strategy on the brand side and customer side and fully reflected in the turnaround.
Matthew Boss: The cross border margin slippage this quarter 150 basis points and going.
Matthew Boss: Looking ahead also.
Stabilization.
The gross profit margin and slightly improvement so we do see still.
Matthew Boss: Promotional.
Matthew Boss: Activities as always from from from struggling competitors are.
We see in the market.
Matthew Boss: But the effect is.
Matthew Boss: It's becoming less and less.
Matthew Boss: On the overall customers and especially our customers as we as we target a different customer and as the as the inventory situation clearly improved in the all of our industry.
Matthew Boss: And therefore being less so the promotional activities of our competitors being less relevant for us.
Matthew Boss: Okay.
Speaker Change: Our next question comes from the line of Ashley Halligan from Jefferies. Your line is open.
Speaker Change: Hi, Blake on for Ashley.
Thanks for taking my question. So I wanted to also ask on gross margin, it's nice to see the positive inflection there, but more specifically just on your guidance philosophy. I believe you had said previously you expect Q1 and Q3 to have a weaker bottom line I don't know if you could comment on that do you still expect that to be the case.
Speaker Change: And then if the Q1 gross margin continue that expansion.
Speaker Change: You'd be at the high end of your EBITDA margin range. So can you comment if you are.
Speaker Change: Maybe investing incrementally in expenses.
Speaker Change: The deal or is there any reason or maybe just being conservative is there any reason why that EBITDA margin could be higher for the year.
Speaker Change: Yes happy to take that question I mean, the overall I mean this is the first quarter. So for the full fiscal year 'twenty five which ends in June we obviously.
Speaker Change: We will continue to manage through that.
Speaker Change: We'll have to see how the top line gross profit margin the cost lines all develop.
Speaker Change: Right now.
Speaker Change: We are on good track with Q1 exactly as you as you pointed out and we are fully in line with our expectations.
No so no.
One offs no major shift in strategy.
Speaker Change: Lastly, not through for upcoming lineup acquisition. So we continue we continue our strategy of go to market and as we were not guiding on gross profit margin in the current situation.
Sure.
Speaker Change: Gross profit margin improvement that we.
Speaker Change: Then we expect although overall fiscal year 'twenty five stays stays completely in line with our expectations and guidance.
And that will lead to an improvement.
Speaker Change: <unk>.
Speaker Change: The EBITDA margin and secure the EBITDA margin that we guided we guided for 3% to 5% adjust.
Speaker Change: Adjusted EBITDA margin for the full fiscal year and confirm the guidance and really stick to that expectations.
Speaker Change: Q1.
Speaker Change: Versus Q2, and Q3 versus Q4.
Speaker Change: Q1, and Q3 quarters always weaker quarter on overall adjusted EBITDA margin. That's very typical of that has been the case for the last five years, that's what I called out in the last earnings call.
Speaker Change: Do you expect for Q1 and the overall.
Speaker Change: Lower adjusted EBITDA margin.
Speaker Change: In Q1, when compared to for example, Q2 or Q4, we achieved a adjusted EBITDA margin in this quarter of one 4%.
Speaker Change: That is obviously outside of the 3% to 5% guidance, but as typical very typical in line with the seasonal performance.
Speaker Change: And.
Speaker Change: It was it was very nice to see that the adjusted EBITDA margin clearly improved it improved 200 basis points.
Speaker Change: Year over year so.
Speaker Change: Very good clear visible improvement.
Speaker Change: And again, all aligned with our expectations for the full fiscal year. After three years to 5% adjusted EBITDA margin and you're completely right.
Speaker Change: <unk> of that will be driven by an improvement in cross board margin, but we will continue to work on all other cost lines.
Speaker Change: Two to enable that that guidance and secure our.
Speaker Change: Profitable growth.
That's very helpful. Thanks, So much and then last one if I could just ask I.
Speaker Change: I don't know how much you could talk about it but.
Speaker Change: Ahead of the deal proposed deal I think the tech integration was going to be an important part of it is there any work you can start doing now or what maybe gives you confidence that you'll be able to.
Speaker Change: <unk> administration there.
Speaker Change: So much.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Until the deal is approved by the <unk>.
Speaker Change: Sorry, we cannot do.
Speaker Change: Any heavy lifting but of course we.
Speaker Change: <unk> conducted a proper due diligence we analyze the tech stack that is at the moment in place at Duane App.
Speaker Change: Porting all of the different businesses.
Speaker Change: And we of course.
Speaker Change: Defined what our tech stack needs to still develop to fulfill all the needs that we identified and that part we can start that part we can work on.
Speaker Change: To prepare on our side.
Speaker Change: Supporting the businesses so in that sense work is ongoing already.
Speaker Change: But the actual engagement the actual working together with the other side. We can only start once did you that has been approved.
Speaker Change: And we have reached the end of our question and answer session. This concludes today's conference call. Thank you for your participation you may now disconnect.
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Speaker Change: Yeah.
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Speaker Change: Yeah.
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Speaker Change: Okay.
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Speaker Change: Yeah.
Speaker Change: Sure.
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