Q2 2025 MYT Netherlands Parent BV Earnings Call
Speaker Change: Christian Brancusi Meg McGarvey Chris Fury Gwen Stefani Rachel Holcomber Louis Baker Fred Stewart Sterling C.B.
Outro
Speaker Change: Greetings and welcome to the MyTheresa second quarter of fiscal year 2025 earnings conference call. At this time all participants are in a listen-only mode.
Speaker Change: Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A.
Speaker Change: We ask that you please limit your questions to one and one follow-up. In order to ask a question, simply press star followed by the number one on your telephone keypad. It is now my pleasure to introduce your host, Martin Beer, MyTheresa's Chief Financial Officer. Thank you, sir. Please begin.
Speaker Change: Thank you, Operator, and welcome everyone to MITREASER's Investor Conference Call for the second quarter of Fiscal Year 2025. With me today is our CEO, Michael Kliger.
Speaker Change: 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.
Speaker Change: Many factors could cause actual results to differ materially. We are on a no-duty to update forward-looking statements.
Speaker Change: In addition, we will refer to certain financial measures not reported in accordance with IFS on this call.
I will now turn the call over to Michael.
Michael Kliger: Thank you Martin. Also from my side a very warm welcome to all of you and thank you for joining our call.
Michael Kliger: Today, we will comment on the results and performance of our second quarter of fiscal year 2025.
Michael Kliger: We are very pleased with our results in a still volatile macro environment.
Michael Kliger: With strong, accelerating revenue growth and positive, significantly improved adjusted EBTA in the second quarter, we continued our very positive business momentum from the previous quarters and have achieved a significant step up in financial performance.
Michael Kliger: in H1 of fiscal year 2025 compared to H1 of fiscal year 2024.
Michael Kliger: We believe that there are clear signals for an improving overall luxury market.
While, of course, concerns remain for the macro-environment.
Michael Kliger: We have reaffirmed our leadership position in terms of financial performance and reputation in digital luxury.
Michael Kliger: Our clear focus on the high-spending, wardrobe-building top customers sets us apart and allows us to win market share and grow profitably.
Michael Kliger: Strong top customer revenue growth, an outstanding average order value, and excellent customer satisfaction scores demonstrate our relentless customer focus, which is a key success factor for MyTheresa.
Michael Kliger: We continue to be very excited about the expected acquisition of YNAB. This acquisition will allow us to create a global digital luxury platform across multiple highly distinguished storefronts.
Michael Kliger: We believe we will be able to generate significant synergies in using a joint backbone. But most importantly, we will have one of the most relevant overall value propositions for global luxury shoppers and brands.
Michael Kliger: We continue to expect closing of the transaction in the first half of calendar year 2025.
Michael Kliger: Today, I wish to highlight three key messages to you that set us apart in the second quarter and clearly demonstrate the continued success of the MyTheresa business despite the ongoing macro uncertainties.
Michael Kliger: First, with our distinctive business model focusing on big spending, wardrobe building, luxury shoppers, we showed that we are fully on track for strong, profitable growth for full fiscal year 2025.
Michael Kliger: Second, we clearly demonstrated again that MyTheresa builds a community for true luxury enthusiasts and creates desirability through digital and physical experiences, which makes us highly attractive for true luxury brands to partner with us.
Michael Kliger: Third, we are well positioned and equipped to create a leading global digital luxury group of enormous reach and relevance with the expected acquisition of YNAB.
Michael Kliger: Let me now comment in more detail on these three messages.
Michael Kliger: First, the second quarter demonstrated again our unique ability to generate profitable growth based on our distinctive business model, focusing on the wardrobe building expenditure.
Michael Kliger: In Q2 of fiscal year 2025, we grew our GNV by plus 11.9% compared to Q2 fiscal year 2024.
Michael Kliger: We achieved a strong net sales growth of plus 13.4 percent in Q2 of fiscal year 2025 compared to Q2 of fiscal year 2024.
Michael Kliger: We are fully on track to achieve our outlook for the full fiscal year 2025.
24.
Michael Kliger: And the U.S. accounted for 20.6% of total net sales of our business in the second quarter of this year, 2025.
Michael Kliger: Our highly curated selection of true luxury brands resonates very well with the big spending U.S. luxury customers looking for multi-brand inspiration.
Michael Kliger: and we continue to see the market as a major source for future growth.
Michael Kliger: In Europe, including Germany and the UK, we also experienced a strong double-digit net sale growth of plus 12.8% in the second quarter of fiscal year 25 compared to the second quarter of the previous year.
Michael Kliger: While results in China and Asia continue to be impacted by the ongoing macro headwinds and uncertainties.
Our clear focus on big spending, water-building customers.
is the fundamental driver of our continued success.
Michael Kliger: Our GMV with our top customers grew by plus 9.1% compared to Q2 of this year 24.
Michael Kliger: This was largely driven by an increase of the average spend in terms of GMV per top customers by plus 13.6% compared to the same period last year.
Michael Kliger: In the United States, our business with top customers in terms of GMV grew by plus 34.7% in the second quarter of fiscal year 2025.
Michael Kliger: Martin will talk in a few minutes about the details of our bottom line results for the second quarter, but let me provide you already with some key operational highlights.
Michael Kliger: We achieved excellent customer satisfaction measured by our internal net promoter score that reached an outstanding 83.3% in Q2 Fiscal 25, demonstrating the consistent excellence of our customer services proposition.
Michael Kliger: Our average order value last 12 months increased by plus 9.5% to €736 in Q2 FY25, demonstrating the success of our focus on selling high-end luxury products to top customers.
Michael Kliger: Furthermore, we reported stable return rates and improving cost ratios in the second quarter of fiscal year 2025.
Michael Kliger: All these operational highlights underline the fundamental strengths and the consistent performance of our business model.
Michael Kliger: The second quarter clearly showed that MyTheresa builds a community for true luxury enthusiasts and creates desirability through digital and physical experiences.
Michael Kliger: This makes us highly attractive for luxury brands to partner with us.
Michael Kliger: The second quarter saw many high-impact campaigns and exclusive product launches that drove our global business with high-spending wardrobe-building customers.
Michael Kliger: We launched exclusive womenswear and menswear runway looks from Moncler, Grenoble, as well as exclusive bags and accessories from the ever Sonia Fujita collection for womenswear.
Michael Kliger: Menswear and Life. We launch an exclusive womenswear capsule collection by Victoria Beckham. Only available at MyTheresa.
Michael Kliger: We were exclusive partner for launching the Women's Wear Miu Miu Ski Collection, only available at Miu Miu and Maitareba. And we exclusively offered our top customers early access to the Women's Wear Gucci Holiday Collection.
Michael Kliger: We were exclusive pre-launch partners for Kate's Resort 2025 collection and Allianz Archetypes collection.
Michael Kliger: Finally, I wish to mention that we launched an exclusive menswear evening wear collection from L'European.
Michael Kliger: Another very recent and noteworthy collaboration is the launch of Bulgari fine jewelry and watches on my today.
Michael Kliger: With the prestigious Italian Maison Bvlgari, we are further expanding our fine jewelry assortment. This latest brand partnership is a clear testimony and reinforcement of our clear focus on high spending from customers.
Michael Kliger: In addition to creating the viability for our top customers with exclusive digital campaigns and product launches, we also hosted, again, many events and physical experiences for our top customers, some of which were true money-can't-buy experiences.
Michael Kliger: We aspire to constantly engage with our top customers across the globe to build strong, long-lasting relationships.
Michael Kliger: In the second quarter, we hosted various top customer events, including Style Suites in New York, Singapore, Toronto, and Miami. We also invited top customers to a multi-day Style Suite event at the Nature Discovery Park on the rooftop of K11 Musea in Hong Kong.
Michael Kliger: We arranged an intimate cocktail event for top customers in Jeddah and an intimate dinner in Abu Dhabi.
Michael Kliger: Top customers were invited to an exclusive Parisian experience with Berluti in Paris that included a private tour of Berluti's renowned shoe atelier.
Michael Kliger: We also hosted an elegant cocktail reception and dinner with the Attico at the iconic St. Ambrose in Milan in attendance of both designers Giulio Ambrosio and Giorgia Tordini.
Speaker Change: Together with Oscar de la Renta, we hosted a dinner at the HIA Hub in Riyadh in attendance of the designers Fernando Garcia and Laura Kim.
Speaker Change: Another highlight was an intimate cocktail and dinner with Victoria Beckham at Coco Duck in New York to celebrate the launch of the third exclusive Victoria Beckham X Maitreya capsule collection.
Speaker Change: We also hosted several fine jewelry events, including a cocktail at L'Hermitage Beverly Hills and an exclusive event with the fine jewelry brand Yeprim in New York.
Speaker Change: Please see our investor presentation for more details on our various exclusive events around the world and the second quarter.
Speaker Change: As always, the absence highlights for our top customers were amazing, true money-can-buy experiences that we created for them in the spirit of being a community for luxury enthusiasts.
Speaker Change: We invited guests to an unforgettable mountain experience with Zenya between the scenic Biela Alps of Piedmont and the culinary treats of Milan.
Speaker Change: Guests were welcomed to Oasis Zegna where they immerse themselves into the history and craftsmanship of Zegna through a private tour of the houses we live.
Speaker Change: The visit continued to the founder's villa, Ermenegildo Zegna, where guests enjoyed a lunch inspired by the family recipes of Nina Zegna.
Speaker Change: The experience concluded with an intimate dinner in Milan in attendance of artistic director Alessandro Sartori.
Speaker Change: Another highlight was an exclusive multi-day Nordic winter experience with Moncler Grenoble in Oslo.
Speaker Change: Over two days, our guests were invited to various unique moments, including a cocktail reception and dinner at the iconic contemporary Oslo Opera House.
Speaker Change: followed by snow activities at Ski More Park Ski Resort the day after.
Speaker Change: In the United States, we have just announced that we will team up with Bemelman's Bar, the storied New York bar, for an exclusive invite-only pop-up in Aspen.
Speaker Change: Together we are creating an immersive apres-ski experience, bringing luxury fashion and Benelman's signature martinis to Aspen on February 14th through March 2nd.
Speaker Change: In addition to providing our top customers with memorable experiences, all these events also created global brand awareness for MyTheresa through press and social media amplification.
Speaker Change: Third, we see ourselves well-positioned and equipped to create a leading global digital luxury group with enormous reach and relevance with the expected acquisition of Juke's Net-a-Porter.
Speaker Change: We will be home to some of the most distinguished digital store brands in the world.
Speaker Change: Mike Areva and the brands Net-A-Porter, Mr. Porter, Dukes and the Outnet.
Speaker Change: all individually have earned a strong reputation in the luxury industry for their pioneering roles in innovation, authoritative editorial voice, and curation, as well as high quality customer service.
Speaker Change: We are committed to further strengthen and develop the unique store brands and their identities within the group by building on their heritages while fostering synergies in the back of house.
Speaker Change: We expect closing of the transaction in the first half of 2025.
As we enter a new and exciting phase...
Speaker Change: This new name clearly underlines our unique focus on creating desirability for luxury enthusiasts with digital and physical experiences.
Speaker Change: Lux Experience will serve as a unifying symbol, reflecting the core values of a strong customer focus, a highly curated edit and inspiration, as well as the creation of desirability through unique digital and physical experience.
Speaker Change: Of course, we will continue to serve our customers with our well-known and highly loved brand name, MyTheresa.
Speaker Change: We will continue to be listed on the New York Stock Exchange with the trade name Lux Experience and the new ticker symbol of LUX.
L-U-X-E. That will replace the current ticker symbol MYT-M-Y-T-E.
Speaker Change: Lux Experience will present the most exciting opportunity for investors worldwide to participate in the huge market opportunity in digital multi-brand luxury shopping.
Speaker Change: We also recently announced the nomination of Burkhard Grundt, Chief Financial Officer of Richemont, as a new Supervisory Board member.
Speaker Change: With the completion of the transaction, we are excited to welcome Richemont, one of the most renowned and largest luxury companies, as a major shareholder of MyTheresa.
Speaker Change: As part of the agreement signed, Richemont has the right to nominate a candidate for a seat on the Supervisory Board.
Speaker Change: expanding it from seven to eight seats. We are delighted that Burkhard Gund, a highly qualified financial and industry expert in the luxury goods sector, has been nominated to join the board upon closing.
Speaker Change: The board will remain composed of a majority of independent directors under both NIC and Dutch Corporate Governance Code standards.
Speaker Change: Both the renaming and the nomination of Burkhard Grund will be presented for approval by our shareholders at an extraordinary general meeting scheduled for March 6 and are subject to completion of the YNAB acquisition.
Speaker Change: With all the above, it should come as no surprise that we are very pleased.
Speaker Change: with our performance in the second quarter of fiscal year 2025.
Speaker Change: We believe that the strong financial results demonstrate the strength and consistency of our business model delivering profitable growth.
Speaker Change: We are extremely well positioned and fully prepared for the expected acquisition of YNAB, which will unlock even greater opportunities for profitable growth and will create significant value for our shale.
Speaker Change: All this, and the results of the first half of fiscal year 25, support our strong confidence in our medium-term growth trajectory and profitability target.
Speaker Change: And now I hand over to Martin to discuss the financial results in detail.
Martin Beer: Thank you, Michael. As mentioned, we continue to successfully work towards the closing of our acquisition of the Juke's Net-A-Porter Group, expected in the first half of 2025. And we are truly excited for this next chapter of growth.
Martin Beer: with establishing LexXperience, a clear global leader in online and multi-brand luxury.
Martin Beer: We will provide a more in-depth view on the performance and our plans for the future after closing.
Martin Beer: I will therefore focus this call on the financial highlights of our second quarter and the first half of fiscal year 2025, ended December 31st, 2024.
Martin Beer: We are very pleased with our results in the second quarter of fiscal year 25.
double-digit net sales growth of plus 13.4 percent.
Our AOV LTM increased by plus 9.5 percent.
Martin Beer: an improvement in the gross profit margin of 110 basis points.
Martin Beer: and a strong adjusted EBITDA margin of plus 7.3%, an increase of 350 basis points versus last year.
Martin Beer: Even with our strong top-line growth, inventory levels decreased minus 1.3% year-over-year with a DIO of 258 days right at the target level.
We will continue our track record of profitable growth.
leveraging our global presence
Martin Beer: increasing acquisition of true top luxury customers worldwide and ever increasing support from the strongest luxury brands.
Martin Beer: I will now review the financial results for the second quarter and first half of Fiscal Year 25, ended December 31, 2024, in more detail and give additional input on certain key developments affecting our performance.
Unless otherwise stated, all numbers refer to you.
Martin Beer: September to December 24, net sales grew by 26.4 million or 13.4 percent.
in the first six months.
of the first fiscal year. Net sales grew by 10.6%.
424.7 million
Martin Beer: We saw an increase in GMV per all customers of plus 6.3% in the second quarter of fiscal year 25. And even more impressive, the GMV per top customer
increased by plus 13.6% during the quarter.
Martin Beer: With that, GMV increased by 26 million, or 11.9%, to 244.7 million, as compared to 218.7 million in the prior year quarter.
in the first six months.
GMV grew by 9.2% to 461.2 million.
with an increase of 64 euros per order.
Martin Beer: Our average order value in the last 12 months now stands at an outstanding 736 Euro.
Martin Beer: as compared to €672 in the prior period, a plus of 9.5%.
Martin Beer: Our increase in AOV improves not only our unit economics, but also manifests our successful focus on full price selling at the very high end of true luxury.
Martin Beer: We are outpacing our competitors and thus continuously capture market share.
Martin Beer: In Q2 of fiscal year 25, we grew our business in the U.S. by plus 17.6 percent.
Martin Beer: Our net sales share in the U.S. now stands at 20.6%, driven by increase in GMV, coming from our top customers of plus 34.7%.
Martin Beer: Our core market Europe also grew by plus 12.8% in net sales and we are strengthening our market positions worldwide.
Martin Beer: In the second quarter of fiscal year 25, lost profit increased by 16 percent.
Martin Beer: to $113.6 million as compared to $97.9 million in the prior period.
Martin Beer: The gross profit margin increased by 110 basis points to 50.9%.
Martin Beer: In H1 of FY25, the cross-profit margin increased by 140 basis points from 46.2% to 47.6%.
Martin Beer: We continue to focus on increasing our share of full-price sales and remain cautiously optimistic that we will be able to successfully continue to do so.
Martin Beer: The adjusted shipping and payment cost ratio decreased by 90 basis points during the quarter, now standing at 13.8% as compared to 14.7% in the prior year period.
The improvement mainly stems from our high-quality customer focus.
resulting in higher AOVs and stable return rates.
Martin Beer: In H1 of fiscal year 25, the adjusted shipping and payment cost ratio decreased by 60 basis points.
to 13.7% from 14.3% in the prior year period.
Martin Beer: In the second quarter of fiscal year 25, the marketing cost ratio increased by 160 basis points from 10.7% to now 12.3%.
We stay focused on acquiring high potential customers.
and retaining our top customers.
With returning to these normal levels of marketing costs,
Martin Beer: we are able to position Margarita even more successfully to capture market share as the market continues to pick up.
Martin Beer: During the six months ended December 31st, 2024, the marketing cost ratio as a percentage of GMV increased by 70 basis points.
Martin Beer: to now 11.9% as compared to 11.2% in the prior year period.
Martin Beer: It's just that selling general and administrative SG&A cost ratio decreased by 160 basis points to 13.9 percent.
on an absolute basis.
Adjusted SG&A expenses remained stable at $33.9 million.
In the first six months, fiscal year 25,
Martin Beer: The adjusted SG&A cost ratio decreased by 110 basis points to 13.9 percent.
Martin Beer: We capitalize on cost leverage to optimize our operational efficiency as we scale.
We remain committed
to continuously decrease our SG&A cost ratio.
and the second quarter of fiscal year 25, adjusted EBITDA.
increased by 8.7 million to 16.2 million.
Martin Beer: They adjusted even the margin increase by 350 basis points to 7.3 percent.
as compared to 3.8% in the prior year quadrant.
Martin Beer: The increase is mainly driven by a gross profit margin improvement.
despite investments in our market position.
for H1 of FISCIA 25.
Martin Beer: Adjusted EBITDA was at $19.1 million with an adjusted EBITDA margin of 4.5%.
increasing by 280 base points.
Martin Beer: Depreciation and amortization remained fairly stable in the second quarter of fiscal year 25 with $3.9 million as compared to $3.8 million in the prior year quarter.
Martin Beer: As a percentage of GMV, depreciation and amortization decreased from 1.8% to now 1.6%.
Our profitable growth.
and the strength of our business model.
Martin Beer: We're also visible on Adjusted Operating Income and Adjusted Net Income level.
Martin Beer: In the second quarter of fiscal year 25, adjusted operating income was at a margin of 5.5 percent.
just slightly below the 7.3% adjusted EBITDA margin.
Martin Beer: This has been and is a continuous highlight of the MyTreeServe business model.
Adjusted net income in the second quarter.
was 10.6 million or 4.8% of net sales.
Let's take a look at the cash flow statement.
We are fully on track with managing our inventory levels.
Our inventory stood at 404.6 million.
decreasing by minus 1.3% year-over-year even with our top-line growth.
Martin Beer: As of December 31st, 2024, we had a DIO of 258 days.
Martin Beer: which is right at our long-term target of around 260 days inventory outstanding.
Martin Beer: Cash flow from investing used up 0.4 million in the second quarter and 1.7 million in the first six months of the fiscal year.
with this.
CapEx was significantly below 1% of GMB.
Another highlight of our business model.
We ended the six-month period with $13.8 million cash attached.
Martin Beer: The excellent performance of the quarter is fully in line with our expectations.
Given the seasonality of the business,
You always need to look at the first half.
Martin Beer: and the second half of the fiscal year, combining fiscal Q1 and Q2, and combining fiscal Q3 and Q4.
Martin Beer: For the first half of fiscal year 25, net sales grew plus 10.6%.
and the GMV grew plus 9.2%.
The adjusted EBITDA margin was at 4.5%.
Martin Beer: We therefore confirm our guidance for the full fiscal year 2025, ending June 30, 2025, with GMB and net sales growth between 7 and 13 percent.
and an adjusted EBITDA margin between 3% and 5%.
Martin Beer: In line with our seasonality, we expect a typically weaker fiscal year Q3.
Comparable with fiscal Q1.
Martin Beer: With all the above, it comes as no surprise that we're very confident in the success of our unique positioning and business model.
Martin Beer: and we will continue our clear focus on strong and profitable growth.
Martin Beer: We are also truly excited for the medium and long-term outlook of our business as we embark on the next chapter of growth, with the expected closing of the exhibition of the Jukes Metropolitain Group in H1 of calendar year 2025.
Martin Beer: Forming the new group LexXperience, we aim to fortify our clear market leadership position in global multi-brand luxury.
Let's have strong, profitable growth.
Speaker Change: and thereby creating significant value for our shareholders and all stakeholders in MyTresa and the Juke's Net-A-Porter Group.
Michael Kliger: And with that, I will now turn the call back over to Michael for his concluding remarks.
Michael Kliger: Thank you, Marta. We are very pleased with our second quarter of fiscal year 2025 earnings results.
Michael Kliger: We are even more pleased to see ourselves well positioned to achieve our Fiscal Year 2025 Guided Targets, based on the first half of Fiscal Year 2025.
Michael Kliger: We continue to focus on creating a community for true luxury enthusiasts worldwide and their desirability through digital and physical experiences.
Michael Kliger: We see ourselves well-prepared for the expected acquisition line-up and are excited to create significant value for our high-end customers.
Brand Partners and Sharers
Michael Kliger: And with that, I ask the operator to open the line for your questions.
Speaker Change: And at this time, I'd like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. We kindly ask that you limit your questions to one and one follow-up. Our first question will come from the line of Oliver Chen with TD Cowan. Please go ahead.
Speaker Change: the integration opportunity. Also, as we look forward to that, any other thoughts on the UIC?
Speaker Change: the UK side of the business in terms of restoring better profitability there. And then a follow-up on guidance, we'd love color on gross margins and second half and how you're viewing those. It sounds like inventory is in really good shape. Thank you.
Speaker Change: Thank you, Oliver. Let me address the first two questions and then Martin will speak about the guidance.
Speaker Change: As we are before closing, we, of course, are not in a position to have full operational insights, but we explained clearly in our investor presentation on the announcement of.
Speaker Change: deal agreement that the clear strategy is to bring the luxury businesses of Jukes Net-A-Porter onto the Miterresa platform in the sense of our own developed technology.
Speaker Change: That is clearly the best solution. We have a platform that works. It's fully owned by us, fully operated by us. We know it inside out. We have a strong engineering bench to do that.
Speaker Change: Such a replatforming exercise will require 24 to 36 months. That is an expected
duration and it's quite
achievable based on our experience of our own re-platforming.
Speaker Change: We strongly believe that with a joint back-office and a separated back-office for the off-price businesses, we do and provide the best and most efficient solutions for all those.
Speaker Change: banners that join our group. And then on the banner side, we see opportunity to make them even stronger, even though the brand equity of Net-A-Porter, Mr. Porter, Yules Outlet, are quite strong, but we will invest
Speaker Change: to make them even more desirable and to be fully in line with the principles of Lux Experience, which is customer focused, curation, and inspiration. So we're really excited about this and are hopeful to close the deal in the next
Copyright © 2020, New Thinking Allowed Foundation
Michael Kliger: And then Martin, maybe you would take up the margin question?
Yeah, happy to do so. Guidance and cross-profit margin development.
Michael Kliger: exactly as you rightfully focus on how is the quarter performance changing the...
Michael Kliger: the overall guidance and how it is relating to the guides. The performance in Q2 is fully in line with our expectations and it is always, given the seasonality, you have to look at
Michael Kliger: always the first and the second half. So Q2 and Q4 are very strong quarters. Q1 and Q3, given seasonality, are weaker quarters.
Michael Kliger: in Q2, it was 110 basis points. We expect a similar performance of H2 than what we saw in H1.
Michael Kliger: so therefore I mean the 140 basis points I'm not sure whether due to the lapsing of some effects we
everybody should expect for H2, but...
Michael Kliger: We don't want to come back to decreasing gross profit margins.
We want to continue.
and that is clearly visible in our numbers.
on our focus on a very strong full-price share.
on targeting the right set of customers.
Michael Kliger: and this is fully in line with our guidance. So also expect an H2, a stable, slightly increasing, gross profit margin and the overall H2 to be very comparable with H1.
Thank you, best regards.
Speaker Change: Once again for any questions simply press star 1 on your telephone keypad and we'll take our next question from the line of Matt Boss with JP Morgan. Please go ahead.
Thanks and congrats on a nice quarter.
Matt Boss: Michael, could you speak to current health of the digital luxury backdrop today, maybe relative to the last two years in terms of what you're seeing, and just elaborate on the acceleration in demand that you saw across the U.S. and Europe in the second quarter, and has the momentum continued post-holiday?
Matt Boss: Sure. Thank you, Matt. I think the digital sector is in good health if you regard it from the consumer perspective. The expansion of the digital share in luxury is continuing.
Matt Boss: Of course, there are sort of polarizations out there. It's absolutely true for the big spenders. We continue to see they spend more and more with us.
Matt Boss: post-election, really strong demand and we are very happy with our European business, almost searching for some growth. So we have now a second strong lag in the business and it's of course also a very strong business in the Arabic Peninsula.
Asia, particularly greater China, still lags behind, still is.
The demand is still dampened by the economic outlook.
So, we would say the health is very good.
We have really seen...
Matt Boss: yet to return out of the heavy discounting that we saw last year? The slowdown...
Matt Boss: As discussed before, it has really surprised many players, leading to high inventory levels. And it's not only us, as Martin clearly highlighted, we are actually slightly below last year's inventory.
despite revenue growth.
Matt Boss: But the digestion of inventory or oversupply of energy has happened across the board.
So while
We only see small green shoots in some places.
Matt Boss: The health of the industry is dramatically better than 12 months ago, and then...
Matt Boss: And we, in our numbers for sure, have seen a pivot.
Matt Boss: now for some quarters and therefore our outlook is positive, not negating that the macro environment is still quite volatile.
Matt Boss: Great, and then Martin, maybe relative to three to five percent EBITDA margins this year, how best to think about the timeline you see as reasonable for a return to historical high single-digit EBITDA margin?
Speaker Change: Yeah, happy to do so, Matt. I mean, obviously, in the first half of the fiscal year, we had an EBITDA margin of 4.5%. And for the second half, I mean, for the full fiscal year, we got it to 3 to 5%. Given the uncertainties in the industry, the shifts that, I mean,
Nobody really can foresee how 25 and 26 will unfold.
Speaker Change: But it is clear that we embarked on a trend on the cross-margin side and this is the key driver for our overall profitability. So we clearly expect in the medium term
to come back.
Speaker Change: to the higher single-digit margins that we used to have a couple years ago.
Great. Best of luck.
Speaker Change: Our next question will come from the line of Ashley Helgens with Jeffries. Please go ahead.
Speaker Change: Hi, it's Blake Hunt for Asprey. Thanks for taking our question. I wanted to start with, it sounds like your high-end luxury consumer is obviously really strong. Can you talk at all about the trends of the more aspirational customer throughout the quarter?
And now we have also seen...
Speaker Change: double-digit growth in Europe, which is quite nice to see, even though, of course, also in Europe, there are markets that grow even stronger and some markets are lagging. And this is
Speaker Change: starting to be also driven by aspirational customers, also starting to be driven by better sales in accessories, in
Speaker Change: in 22, but as you rightly say, our strong driver, our gross driver, is the
Speaker Change: better part of the customer cohorts and here we continue to see also in this quarter double-digit
Speaker Change: revenue increase per capita. These are the drivers. This makes Mitarela so successful in a still volatile environment. But we, and I will repeat, we see a pivot in the market.
Speaker Change: If you exclude greater China, then we clearly see a pivot in the market.
Speaker Change: That's encouraging. And then I wanted to ask two more if I could. One was on the marketing ratio that seemed to be up. You seem to lean into marketing spend a bit more in Q2. How should we think about that rate for the second half on marketing?
Speaker Change: And then touching again on the top customers, I think they did decline slightly year over year versus being positive recently. How are you thinking about managing the growth of AOV versus top customers in that trade-off?
Martin Beer: Very happy to answer and you're right and you picked up correctly on our presentation. I'll leave it to Martin for the outlook of marketing spend but actually the two questions are connected.
Martin Beer: We have, as you heard from Martin, increased our marketing spend significantly over the quarter.
Martin Beer: last year. And what we are doing now, we are investing in growth.
with APA fund investments. Of course, in
Martin Beer: The market was more difficult and as we managed costs very tightly to achieve still good financial results, we focused a lot of the marketing spend on the lower, immediately returning
Martin Beer: investments, but now that we see opportunity to grab market share and as now the market is picking up we're also investing more on the upper funnel, which does not give you immediate
Martin Beer: new customers, which does not drive immediate pickup in revenue, but
Martin Beer: sets and lays the ground for future cohort acquisition because for new customers, it takes a while in luxury. It's not immediate conversion.
Martin Beer: Nice pick up. And Martin, maybe you give an outlook on that. Yeah, and with that, what Michael said, we expect also for H2 a comeback to the normal levels of the marketing cost ratio that we always had, around 12 and 12.5%.
Speaker Change: Great, thank you so much and best of luck for the second half.
Speaker Change: Our next question comes from the line of Grace Osadalor with Morgan Stanley. Please go ahead.
Grace Osadalor: Hi, thank you for taking my question and congratulations on the results. I wanted to ask on what you're seeing around price points. We've had a lot of evidence of more premium brands doing better than luxury in the industry, so any colour there that you can call out and also in terms of what you're seeing from luxury prices being put through if you're seeing more entry price for items in the industry. Thank you.
Thank you.
Grace Osadalor: Honestly, in our business, the emergence of more entry price points I cannot confirm. The business is driven by big spenders, is driven by high-priced items. What I can confirm is, however, that we clearly are in a moment of pause, of hold on any further price increases.
Grace Osadalor: So, in that sense, we have come out of a phase where a lot of price increases happened and arguably some of them were too far or too high.
Grace Osadalor: The market overall, I think, is looking at opportunities to bring back the aspirational customer, as just discussed, and we do believe that.
is one element of that strategy.
that our business grows.
Grace Osadalor: that you have seen and as demonstrated by the average order value, which in turn is driven really by the average item value, the 9.5% increase, not, or growth is not driven by a business that is tilting towards premium or entry price.
Thank you.
Speaker Change: And once again, to ask a question, simply press star followed by the number one on your telephone keypad. We'll take our next question from the line of Oliver Chen with TD Cowan. Please go ahead.
Speaker Change: Hey Michael Martin, thanks a lot. US, you've had really great momentum and you continue to have. What are your thoughts in terms of what's fueling that and also service levels and distribution centers?
Speaker Change: Longer term, our thesis is for physical meets digital and bricks meets clicks. What do you think about the future of how you'll evaluate physical distribution as well, more broadly?
Speaker Change: Well, I mean, on the second part, I agree, we agree that physical presence is key. I mean, we believe we need to form strong customer relationships, and we are. We need to present digital, but physical experiences as well.
And for the moment, this clearly means physical pop-ups, physical
Speaker Change: presentations of our brand, of what we do. As of this weekend, we will be present physically in Aspen with the Apres Ski Experience.
Speaker Change: together with our friends from Bemelman's Bar from New York, first time you can experience Bemelman's Bar outside of the Carla in New York. So that we totally agree with.
Speaker Change: and it's no coincidence that we name our overall group Lux Experience. Therefore, physical incarnations, so to speak, are key.
Speaker Change: The key for our success, we believe at least, is our customer focus. Really understanding what it is that our customer wants, introducing products that they desire, be it kids, life, and now a clear focus on fine jewelry.
and really establishing relationships
Speaker Change: very careful with its time, so you need occasional moments to really strengthen and form relationships and otherwise
Speaker Change: Timers and speed is still one of the key components of excellent service in e-commerce.
Speaker Change: We are working hard on this. Our new distribution center in Leipzig has again made it possible to be faster.
Speaker Change: We always said down on the road map if we achieve critical mass and certain geographies We also believe that regional distribution centers can play a role in making time real USP and and obviously with the expected acquisitions there are more opportunities to start doing
Thank you.
Speaker Change: We'll take our final question from the line of Wendy Gao with CICC. Please go ahead.
Wendy Gao: Okay, so hello Martin and Michael, and congratulations to the match results. I think I have a question about the top customer profile by region, like can you share something about maybe the mix about the top customer profile and also the relevant average order value?
Wendy Gao: I mean, we have shared in the past that the top customers in numbers account for close to 4% and make up close to 40% of revenue. And that mix is actually quite...
Wendy Gao: similar across geographies. So this holds true for Europe, for the Americas, and for Asia and greater China. What is true is that the average order values
Wendy Gao: Particular in greater China, particular in Asia, also in the Arabic Peninsula, tend to be higher.
Wendy Gao: So we are getting there, more to four digits and above.
Wendy Gao: Whereas across the other geographies it is three digits and the average is 736, so
Wendy Gao: There is an even higher appetite for some of the more expensive items.
Fine Jewelry in the Roerich Peninsula
Wendy Gao: The percentage and the importance, also driven by our focus of top customers.
is the same across all geography and the desire...
Wendy Gao: to have the latest European luxury available in those regions is also the same in terms of which brands are popular. We've always shared that if you look at the top 30 brands, they are very similar. Maybe the sequences.
Wendy Gao: different across geographies, but the top 30 brands are very similar across the whole world for us.
Understood, thank you and if we...
Speaker Change: Just talking about, like, Winter China, you mentioned that this region is still impacted by maybe the micro-ontophagitis or something else. But if you look at, like, quarter by quarter, how do you think of the trend? Do you think, like, if the rates were, like, recover a bit?
Speaker Change: Yeah, you're absolutely right. It's still dampened, but we do also for this region see continuous improvement, particularly in greater China. We see that the business is improving slowly.
Speaker Change: after, of course, quite a significant contraction. We do believe it has...
Therefore, it is quite interesting and important to see.
Speaker Change: The government will launch in China, but at the moment we do see a slow recovery already.
Speaker Change: That will conclude our question and answer session and our call today. Thank you all for joining and you may now disconnect.
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