Earnings call transcript: Mavi Giyim Sanayi Q4 2025 sees revenue dip, stock rises

Revenue declined 5% YoY to TRY 47.729 billion but gross margin expanded to 51% (up ~70bps Y/Y) and EBITDA margin improved to 18.9%, driving strong operating cash flow of TRY 8.6 billion and a net cash position of TRY 6.9 billion. Adjusted net income was TRY 2.482 billion (5.2% adjusted margin) while reported net income was TRY 2.058 billion (4.3% margin) after a one‑off tax/IAS29 effect; the stock rose ~3.8% after the release. Management guides to ~5% consolidated revenue growth for FY2026 (±1%) and an ~18% EBITDA margin (±0.5%), plans net 15 store openings/expansions, ~6% revenue in CapEx, and proposes a significant cash dividend while continuing buyback activity subject to board/market conditions. Key risks include Turkey macro weakness, FX volatility, supply‑chain/logistics cost pressure and regional geopolitical uncertainty.

Analysis

Mavi’s margin expansion while top-line softening implies a structural improvement in merchandising and markdown management rather than a cyclical windfall — loyalty-driven, higher-margin product mixes and improved inventory turns can sustain incremental EBIT even if consumer spend remains muted. Expect the operating-leverage benefit to flow to free cash flow within 6–18 months as new-store productivity and omnichannel fulfillment economies scale, but that depends on execution risk in the U.S. cohort and the company’s capital allocation choices.

The U.S. rollout is an asymmetric option: if the first 12–24 months of stores hit key cohort metrics (payback trending below ~3 years, digital CAC stabilizing), the dollar revenue stream should re-rate the stock; if they disappoint, marketing and localized SG&A will become a persistent drag. Management’s balance-sheet optionality reduces bankruptcy tail risk but raises a governance/capital-allocation watch — expect management to trade off near-term buybacks/dividends for store-led growth unless buybacks are cheap enough to materially compress float.

Geopolitical and energy shocks are the primary exogenous risk over the next 0–6 months: higher freight/energy costs and TRY depreciation can quickly erase margin gains and pressure working capital. Key catalysts to watch are (1) reported U.S. store cohort metrics in Q2, (2) Turkey CPI and FX moves over the next two quarters, and (3) any corporate action signalling (further buybacks or re-investment), each capable of flipping consensus within weeks rather than years.

Key Decisions for Investors

• Long BIST:MAVI (size 3–5% of equity sleeve) — entry: on a pullback of ~8–12% or on confirmation of Q2 U.S. store cohort KPIs (payback <36 months and CAC flattening). Timeframe 9–12 months; target 30–45% upside; hard stop 15% below entry. Hedge: short 30% notional of TUR (iShares MSCI Turkey ETF) to neutralize macro/FX risk.
• Buy a protective call-spread on MAVI instead of outright equity if volatility is high — buy 12-month call and sell higher strike to finance cost (risk limited to premium, upside capped). Use this when you want exposure to operational re-rating from margin conversion but limit downside from country/energy shocks; target 2.5–3.5x asymmetric payoff versus premium paid.
• Macro hedge: buy short-dated energy exposure (e.g., XLE 3–6 month calls, size 20–30% of MAVI position) to protect against logistic/energy-driven margin compression. Rationale: if Middle East tensions drive energy/logistics costs higher, this reduces downside to EBIT; cost is the option premium but provides a direct, fast hedge over the 0–6 month tail-risk window.