MYT Netherlands Parent B.V. Q3 2024 Earnings Call Transcript

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Provided by Quartr
May 15, 2024

There are 7 speakers on the call.

Operator

Greetings, and welcome to the Mytheris Third Quarter Fiscal 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. Today's call is being recorded and we have allocated 1 hour for prepared remarks and Q and A. It is now my pleasure to introduce your host, Martin Beer, MyTresis' Chief Financial Officer. Thank you, sir.

Operator

Please begin.

Speaker 1

Thank you, operator, and welcome everyone to Mytresa's investor conference call for the Q3 of fiscal year 2024. With me today is our CEO, Michael Klinger. 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 report. Many factors could cause actual results to differ materially.

Speaker 1

We are under no duty to update forward looking statements. In addition, we will refer to certain financial measures not reported in accordance with IRFS on this call. You can find reconciliations of these non IRFS financial measures in our earnings press release, which is available on our Investor Relations website at investors. Myteresa.com. I will now turn the call over to Michael.

Speaker 2

Thank you, Martin. Also from my side, a very warm welcome to all of you and thank you for joining our call today. We will today comment on the results and performance of our Q3 of fiscal year 2024. We are very pleased with our results in a still challenging macro environment. With strong revenue growth and positive adjusted EBITDA in the 3rd quarter, we demonstrated our leadership in a clearly consolidating sector.

Speaker 2

As expected, we achieved a strong double digit top line acceleration of our business, particularly in the United States in the Q3. We continue to see slower demand from aspirational customers and promotional intensity in the market by competitors. But our clear focus on the high spending wardrobe building top customers allows us to win market share in the current environment. Strong top customer growth, a record high average order value and excellent customer satisfaction scores underline our intense customer focus, which is a key success factor for MyTeresa. We clearly see ourselves as one of the few winners in the consolidating luxury e commerce space.

Speaker 2

I wish to highlight today 3 key messages to you that make us stand out in the Q3 and demonstrate the strength of the MyTeresa business despite ongoing macro headwinds. 1st, our commitment to multi brand inspiration with a highly curated offer of true luxury brands drove strong growth, particularly in the United States in the Q3. 2nd, our clear focus on big spending wardrobe building top customers resulted in both strong growth of the number of top customers as well as the average spending of top customers. This highly desirable audience makes us the best positioned platform to partner with Luxury Brands for exclusive activations. 3rd, our very flexible and resilient business model allowed us to significantly improve our profitability compared to Q3 of fiscal year 2023.

Speaker 2

Record high average order value, decreasing customer acquisition costs and stable operating cost ratios highlight this in the 3rd quarter. In summary, we have accelerated our top line growth. We have expanded our top customer business and we have significantly improved our profitability in the Q3 of fiscal year 2024. Let me now comment in more detail on these three accomplishments. 1st, let's look at the growth acceleration in the Q3.

Speaker 2

We grew our gross merchandise value GMV by plus 14.7% compared to Q3 of fiscal year 2023. On a 2 year basis, we grew our GMV by +35.2% compared to Q3 of fiscal year 2022. This strong growth is clearly above the luxury market average. Once more, our business in the United States generated an outstanding growth with +41.6 percent in terms of GMV compared to Q3 of fiscal year 2023. The United States accounted for 22.3 percent of GMV of our total business in the Q3 of fiscal year 2024, and we continue to see the market as a major source for future growth for My Tereza.

Speaker 2

The U. S. Luxury consumer, including the aspirational segment, definitely shop more again. Most importantly, the highly curated offer from true luxury brands by MyTeresa resonates extremely well with big spending U. S.

Speaker 2

Consumers looking for multi brand inspiration. We have grown our U. S. Business 2.6 times over the last 3 years. We also experienced good growth in Europe in the 3rd quarter with plus 9.3% compared to Q3 of fiscal year 2023, while results in China and Asia were still negatively impacted by strong macro headwinds and uncertainties.

Speaker 2

A recovery in these markets in the next quarters will provide a further boost to our top line. 2nd, our clear focus on big spending wardrobe building top customers is the fundamental driver of our success. In the Q3 of fiscal year 2024, our top customer base grew by plus 17% compared to Q3 of fiscal year 2023 and the average spend per top customers grew plus 3.3%. Overall, the business with top customers grew by plus 20.9 percent in terms of GMV compared to Q3 of fiscal year 2023. The further evidence of our success with top customers is that our average order value increased once more by +8% to a new record high of €6.92 LTM in Q3 fiscal year 2024 compared to fiscal year 2023.

Speaker 2

Our superior access to big spending wardrobe building top customers makes us the highly desired platform for luxury brands to partner with. The 3rd quarter saw again many high impact campaigns and exclusive product launches demonstrating our strong relationships and the support from our brand partners. All of them further increased our brand awareness and clearly positioned us globally as the leading digital luxury platform. We've launched exclusive capsule collections with Capes and Courreges only available at Myterraiza as well as exclusive styles from Lueva's Paola's Ibiza collection only available at MyTeresa. We were also exclusive pre launch partner for collections for Modelo Cucinelli and Lueve bags, giving MyTeresa customers exclusive first access to these products.

Speaker 2

One special highlight in the Q3 was also that MyTeresa was one of the very few partners globally to launch the our brand collaborations. Reinforcing our focus on big spending wardrobe building customers, we also hosted exclusive events for our top customers providing them with money can buy experiences. Examples of events in the Q3 included the celebration of the Kate capsule collection in Paris with the Founder and Creative Director, Kate Holstein, present. In the United States, where our top customer number grew a remarkable plus 48.3% in the 3rd quarter, we hosted events in New York City during the New York Fashion Week, in Los Angeles during Freeze and recently also in Connecticut. We also strongly believe in the ongoing recovery of the Chinese luxury market and recently hosted VIC events in Shenzhen and Xiamen as well as in Singapore.

Speaker 2

Please see our investor presentation for more details on our events and customer experiences. Another recent highlight was the customer and brand experience that we created together with our partner Courreges during the Shanghai Fashion Week. As part of the official calendar of Shanghai Fashion Week, we hosted 3 events in 24 hours. We created a public exhibition in the fashion house Courreges celebrating our exclusive capsule collection, but also showcasing archive pieces never shown before outside of France. We hosted a talk with the Artistic Director, Nicolas Difelice for Chinese fashion students and we hosted a VIC dinner for press and our Chinese top customers with the CEO and the Artistic Director attending.

Speaker 2

Please see our investor presentation for more details on these remarkable events and the media coverage. Let me conclude my statement by commenting on the 3rd accomplishment in the Q3, namely the significant improvement in profitability compared to Q3 of fiscal year 2023. MyTeresa operates a very flexible and resilient business model, which allows us to react quickly to a changing environment, which we proved in the more difficult recent quarter. Maarten will talk in a few minutes about the details of our bottom line results for the Q3 of fiscal year 2024. But let me provide you with some key operational results of the Q3.

Speaker 2

Customer satisfaction, as measured by our internal Net Promoter Score, reached 80.6% in Q3 fiscal year 2024, a strong increase over last year's Q3 result. As mentioned, our average order value increased by 8% to a new record high of EUR 692 LTM, also driven by the ongoing expansion of our fine jewelry offer. Our number of first time buyers reached over 118 1,000 in the Q3 of fiscal year 2024, while our customer acquisition costs, CAC, actually declined by minus 2.8% compared to Q3 of fiscal year 2023, which is a remarkable achievement in the current environment. We also continued the ramp up in our new Leipzig distribution center from where we shipped already more than 60% of all customer orders at the end of March. Finally, we also recently launched our new Maiteresa retail media services, allowing our luxury brand partners to place paid media campaigns on our platform.

Speaker 2

With all of the above, it should come as no surprise that we are very pleased with our performance in the Q3 of fiscal year 2024. We believe that our results demonstrate the strength and consistency of our business model delivering profitable growth. We see ourselves as a clear winner in the consolidating luxury e commerce space. We are extremely well positioned to benefit from the tremendous growth prospects when market conditions will improve globally. To capitalize on these prospects, we are actively evaluating opportunities to support and accelerate our investments in future business growth.

Speaker 2

This also supports our strong confidence in our medium term growth trajectory and profitability levels despite the ongoing short term uncertainties in the macro environment right now. And now I hand over to Martin to discuss the financial results in detail.

Speaker 1

Thank you, Michael. Yes, we are very pleased with our performance during the quarter. In line with our overall guidance for H2 of our fiscal year 'twenty four, in the past quarter, we achieved double digit growth top line and improved our profitability bottom line. We significantly reduced our gross profit margin slippage and are fully on track with managing our inventory position. We extended and secured our revolving credit facility for the next years and continue to be the value adding reliable and preferred partner for the top luxury brands.

Speaker 1

In a challenging and consolidating market, we confirmed our successful leadership position as the clear winner in multi brand luxury. MyTeensa is all set to become a multi billion business medium term with an ongoing double digit annual growth trajectory of high teens, low 20s and an adjusted EBITDA margin of at least 8%. I will now review our financial results for the Q3 of fiscal year 2024 ended March 31, 2024 in more detail and will provide additional background on certain key developments that affected our performance throughout the quarter. Unless otherwise stated, all numbers refer to euro. In the Q3 of fiscal year 'twenty four, GMV growth was at plus 14.7 percent compared to the prior year quarter, achieving 252,200,000 Our track record on top line growth is further evidenced of our 2 year growth rate of plus 35 0.2% and 3 year growth rate of +53.1%.

Speaker 1

Customer engagement and retention continued to be strong during the Q3 with a total of 862,000 active customers. As mentioned, we were able to grow the number of our top customers by plus 17% in the quarter and by plus 16% in the last 9 months. Our focus on attracting the most valuable high potential multi brand luxury customers and nurturing their loyalty with excellent curation and service continues to be our winning formula. In the U. S, our top customer base grew by an exceptional plus 48.3% in the quarter.

Speaker 1

During the Q3, net sales grew by plus 17.6 percent, reaching 233,900,000 dollars We have 7 major brands operating seamlessly under the CPM and are able to offer our brand partners both models, wholesale or CPN. From regional perspective, we saw again exceptional growth in the U. S. And strong growth in Europe and rest of world. In the U.

Speaker 1

S, net sales grew by +44.6 percent in the quarter, Europe, +9.3 percent Europe, excluding Germany, +13.1 percent and rest of world, plus 16.4%. Our global business model and seamless execution worldwide ensures capturing growth opportunities wherever they open up. Our global setup becomes more effective every quarter with now only 51.6 percent of net sales coming from Europe, with strong leadership positions and 48.4 percent already from the U. S. And rest of world, where we experienced exceptional growth opportunities.

Speaker 1

Our LTM AOV increase of +8 percent or €51 per order delivered is remarkable and improves our order economics notably. During the Q3 of fiscal year 2024, gross profit increased by plus 12 percent to €101,600,000 as compared to €90,700,000 in the prior year quarter, and with a gross profit margin of 43.4%. The gross margin slippage further decreased. This come down significantly from 7.40 basis points in Q1 and 4.90 basis points in Q2 to now 220 basis points in Q3. In addition, the gross profit margin slippage in relation to GMV was only 100 basis points.

Speaker 1

We experienced a solid gross profit increase by +12%, but still not as strong as we expected as inventory clearance activities of competitors exiting the market impacted the growth rate. As highlighted before, we clearly see improvements in the gross profit margin situation. With again expected double digit growth rate of gross profit in the upcoming Q4, we expect total gross profit to be on last year's level for the full fiscal year 2024. The overall market environment has not yet normalized, but our margin development shows that we are able to contain the effects. We continue our commitment to full price selling, which is highly valued by our brand partners.

Speaker 1

Our adjusted shipping and payment ratio increased from 14.3 percent to 15.3 percent due to our increasing international sales share and strong growth in countries like the U. S, where we pay all customs duties for the customer. Due to our continuous efforts to capture efficiencies in the shipping, payment and custom setup, we expect to mostly offset further cost increases in the future and therefore target stability in the cost ratio on this level in the upcoming quarters. Following our strategy of the preceding quarters, our focus remained yet again on the acquisition of high potential customers and top customer retention. We adjusted our total marketing expenses to the overall softer market environment.

Speaker 1

As a consequence, our marketing expenses decreased by $2,600,000 to $23,100,000 during the quarter. The marketing cost ratio decreased by 2 50 basis points to now 9.2%. Our CAC decreased by minus 2.8%. Despite this low marketing cost ratio, we were able to achieve a net sales growth of +17.6 percent. This excellent performance on new and existing customers shows the effectiveness of our II driven performance marketing tools, our increasing brand strength, the superiority of our curated offering and our excellent service delivery.

Speaker 1

We continue to focus on growth in a cost effective manner. We were able to keep the adjusted selling, general and administrative expenses mostly stable in absolute terms at CAD30.8 million as compared to CAD29.7 million in the prior year quarter. With our strong growth in the quarter, the adjusted SG and A cost ratio decreased by 130 basis points to 12.2% as compared to 13.5% in the prior year period. We will continue to grow in a cost effective manner, but will also ensure that we build up the right resources to achieve our strong growth targets in our short- and medium term growth trajectory. As a result, we are very happy about our improved profitability.

Speaker 1

Our adjusted EBITDA has improved significantly as compared to the prior year quarter. During the Q3 of fiscal year 'twenty four, adjusted EBITDA stood at €9,200,000 as compared to €3,200,000 in Q3 of fiscal year 2020 3. The adjusted EBITDA margin improved by 230 basis points to now 3.9% as compared to 1.6% in the prior year period. For the full fiscal year 'twenty four, ending in June 'twenty four, We continue to target the lower end of our guided 3% to 5% adjusted EBITDA margin. Given the continuous challenging market environment in Luxury Worldwide, to achieve this profitability level is remarkable and clearly beats peer performance.

Speaker 1

It enables us to continue to capture market share,

Speaker 2

to grow

Speaker 1

strongly and to fortify our leadership position. As the market uncertainties are expected to continue, we also expect our profitability levels in the next fiscal year to be around that level. Given our low levels of depreciation and amortization, unique and typical for the Myetresa business model, we again achieved a strong profitability also on adjusted operating income or adjusted EBIT level. Adjusted EBIT margin was at +2.3 percent compared to a 0.1% adjusted EBIT margin in the prior year period. The adjusted net income margin was at a positive plus 1.8% in the quarter.

Speaker 1

Looking at cash flow. For the quarter, given the seasonal inventory buildup, operating cash flow was at minus 11,600,000 compared to minus €36,000,000 during the prior year period. The minus €11,600,000 dollars came after a +18,500,000 operating cash flow in the preceding quarter. A much lower use operating cash flow in the quarter compared to previous year quarter is mostly driven by reduced inventory purchases. We are on track on managing our inventory levels.

Speaker 1

As of March 31, inventory is at +11.9 percent year over year, lower than our top line growth and significantly reduced from the 44.4% at the end of Q1 and the plus 33.1% at the end of Q2 of fiscal year 2024. End of March 2024, our BIO was at 280 days, down from 310 days in June 23 and approaching the target range of 2 60 days. Cash flow from investing activities was at $4,900,000 compared to €6,500,000 in the previous year quarter. This was mostly driven by the remaining payments for our new distribution center in Leipzig. We continue to have very low CapEx cash flows in our business model and therefore expect the cash flow from investing activities in the next quarters to return again to below 1% of net sales.

Speaker 1

As of March 31, we have successfully entered into a new multiyear revolving credit facility agreement, replacing the old one and securing us $75,000,000 cash. This will enable us to fund our continuous growth strategy. As of March 31, the cash utilization of the credit line was at $26,100,000 with $10,600,000 cash at hand. We expect an even lower utilization at the end of our fiscal year end of June 24. Please remember that besides the revolving credit facility that we use for seasonal networking capital financing from time to time, We do not have any other bank debt in our balance sheet.

Speaker 1

We have a very strong balance sheet with an equity ratio of 65%. With all what Michael and I talked about so far, comes as no surprise that we remain very confident in our short term and especially in our medium and long term outlook. For the full fiscal year 2024, which ends on June 30, 2024, we confirm our guidance for the top and bottom line at the lower end of the guided ranges of GMV and net sales growth between 8% to 13% and an adjusted EBITDA margin between 3% 5%. The ongoing consolidation in our industry is gaining speed, and it becomes clearly visible who are the out performers. We are gaining market share on an accelerated level and have completed our 2 major infrastructure milestones, securing our successful growth.

Speaker 1

Our fundamental new IT setup and the new distribution center and lab security. Mitrice has all set to become a multi billion business medium term with an ongoing double digit annual growth trajectory of high teens, low 20s and an adjusted EBITDA margin of at least 8%. And with this, I will now turn the call back over to Michael for his concluding remarks.

Speaker 2

Thank you, Martin. We are very pleased with our Q3 of fiscal year 2024 earnings results. We are seeing the top line acceleration and profitability improvement as projected and are on track to achieve our fiscal year 2024 guidance. Hydrarisa is poised for an extremely successful next chapter in a journey to become the global leader in digital luxury. We believe that MyTeresa offers the best digital luxury shopping experience for big spending consumers and true luxury brands.

Speaker 2

And with that, I ask the operator to open the line for your questions.

Operator

Thank you. We will now begin our question and answer session. Your first question comes from the line of Oliver Chen from TD Cowen. Please go ahead.

Speaker 3

Hi, Michael and Martin. This is Neil Goh from Oliver's team. My question is just on U. S. Growth, nice job on the over 40% there.

Speaker 3

What was the year over year comparison drivers of the strength? And then what are your key initiatives to as key drivers of the strength? And then what are your key initiatives to lean into that customer going forward relative to Europe and Asia, which

Speaker 1

is obviously a smaller piece of the business?

Speaker 2

Thanks. Yes. Thank you for your question. In the Q3, we grew our business in GMV 41.6% over the quarter of last year. So a clear acceleration on the already good numbers, double digit growth numbers in Q1 and Q2, which makes us mix the U.

Speaker 2

S. Business actually now with 22%, the largest region for our company. And we are very pleased with this and we see as drivers a similar pattern what we have seen in other geographies. It's really the top customers, it's really the big spenders. The number of big spenders, the 2 highest tiers in our customer pyramid, this number even grew 48% in the U.

Speaker 2

S. So it's really growth at the top, which then of course means it's really growth driven by ready to wear. It's really growth driven by the big regions for these type of customers. Number 1, California number 2, East Coast, Manhattan, New York, Connecticut, but then also, of course, Florida and Texas, so highly correlated to the areas where there are these type of customers. And we are continuing to focus on these customers by providing unique experiences for these customers, be it in the U.

Speaker 2

S. Themselves or inviting U. S. Customers to come to unique experience that we host in Europe. For example, 2 weeks ago, we hosted an event with Brunello Coccinelli, and we welcomed U.

Speaker 2

S. Customers there. Next week, we will host an event with Deutsche Gabbana at Capri, and we will welcome U. S. Customers there.

Speaker 2

So that continued focus on the high end, plus more brand awareness. We will have, as last year, a pop up in the Hamptons this year. So there's really a lot marketing activities clearly targeted to those customers looking for multi brand inspiration and we see a clear desire by top end customers to have a platform that solely focuses on luxury for multi brand inspiration.

Speaker 3

Got it. And then obviously you did mention again the continued green shoots and the aspirational customer in the region. So are you seeing some a pickup in like handbags and dresses, shoes like some of those categories? Yes. Yes.

Speaker 3

And just any commentary on if that was maybe a sequential acceleration from the last quarter, how do your expectations for the aspirational customer back up prior to compared to the prior quarter? Thanks.

Speaker 2

No, thanks for reminding. We continue to see those green shoots. So the U. S. Is by far the strongest region in luxury spend, and this is also due to the fact that the aspirational customer is coming back.

Speaker 2

The only thing I want to stress is our fast acceleration in the 3rd quarter is really much, much more driven by our success with the big spenders, while we do observe the green shoots on the aspirational customers. Got it. Thank you.

Operator

The next question comes from the line of Matthew Boss from JPMorgan. Please go ahead.

Speaker 4

Great. Thanks. So Michael, how would you characterize overall health of your core luxury customer today? Could you expand on new customer acquisition trends and speak to competitive advantages you see today for your model relative to peers in the marketplace?

Speaker 2

Thanks, Matt. Happy to do so. So our core customer base, which are the top spenders, is very healthy, very healthy, strongly performing. This drives our unique plus 14% like for like growth in the quarter. To my knowledge, that is not matched by anyone.

Speaker 2

And it is driven by the core and it's driven by attracting more of these in the last quarter, 17% more and these customers also spending more, 3.3%. There is there are geographic differences. So as mentioned on the call, the U. S. Is strongest region, Europe is stable, in Asia we still see uncertainties.

Speaker 2

But in all the regions it is from the top end, it is our focus on these spenders. And that is also because we focus on that. That's a key point of differentiation to many other platforms, we focus on curation, on inspiration. This is what these customers look for. This audience is a multi brand audience.

Speaker 2

Thus, it is attractive for brands to create visibility with them, which makes brands willing, keen to partner with us. We mentioned on the call, again, the unique products, but also experiences we can therefore offer our customers and then it becomes sort of a reinforcing cycle. You have more unique things, you attract a better customer audience and that makes it more attractive to partner, to brand partners to work with us. And particularly important at the moment, while we are of course not completely insulated from discounting in the marketplace from too much inventory. It is still the best customer because their full price share is very high and thus we have come quite a distance from the not so great performance in Q1 to the much better performance in Q3 and we see ourselves to continue on that stretch.

Speaker 2

And finally, the landscape is changing as Martin and I refer to. So the landscape of truly inspirational multi brand platforms that operate on a global basis is getting consolidated. And thus, we believe we have extremely good chances to continue and become a multibillion player with this focus.

Speaker 4

Great. And then maybe just a follow-up, Martin, could you speak to current inventory in the channel? How that maybe impacts forward expectations for the promotional landscape? And then multi year, any structural constraints to returning the 46% to 47% pre pandemic gross profit rate of GMV?

Speaker 5

Yes, happy to do so, Matt. I mean, obviously, as we call it in Q3, we still experience a gross profit margin slippage of 20 basis points also driven by a one time effect of certain competitors exiting the market and we do see some activities there. And so the overall market situation on inventory levels has improved, especially on springsummer 2024, but there's still uncertainties regarding competitive actions and looking ahead. And always remember, I mean, we are staying true to our course. We are focusing on full price selling.

Speaker 5

We are the least promotional, actor in the market, and that speaks to our retaining of top customers and retaining our existing customers. That is why they shop with MyTeresa. There are no structural barriers to returning to gross profit levels that we experienced before, but it still waits to be seen whether this is in the immediate upcoming next quarters

Speaker 2

or whether this is or

Speaker 5

whether this will take more time.

Speaker 4

Great color. Best of luck.

Speaker 2

Sorry, maybe Matt I can add to this. There are of course 2 issues in what we call promotional intensity. There are players that have been overstocked and are discounting to get off their discounts. We clearly see the significant improvement in stock levels for springsummer 2024. The current season, we also will see that same thing for winter 2024.

Speaker 2

So the clear return to normal is happening. But we do have one additional effect at the moment, which short term is not good, medium term is more. As players exit the market, there is even more one time offloading. And so we have seen one time offloading in the month of February, March. That is not structural, that is actually positive structurally, but short term, there's even more stock coming to the market.

Speaker 2

And thus, the strong performance in Q3 makes us very comfortable at those short term pressures, which as I said, clearly give us medium term upside. We can also mitigate, but then in combined with the normal promotion density, we will maybe have a more lingering effect. But the 2 are quite separate. 1 is one time players exiting, the other one is ongoing and the seasonal buy in the channel as a whole is much healthier for springsummer 2024 and for winter 2024.

Speaker 4

That's helpful. Thanks, Michael.

Operator

Thank you. The next question comes from the line of Grace Smalley from Morgan Stanley. Please go ahead.

Speaker 6

Hi. Thank you very much. My question would just be if you could just comment more on what you're seeing on current trading in April May relative to the acceleration that you saw in Q3. And then breaking that down in terms of any changing behavior you're seeing across different product categories or brands and fashion trends? I know in the past you've spoken about the consumer preferences shifting towards quiet luxury, just if you're seeing that continue or any changes there?

Speaker 6

Thank you.

Speaker 2

Well, happy to do so. So, while we do not comment on current trading, we did or Martin did confirm our guidance for the full fiscal year and that implies that we see continued double digit growth also in the final quarter of fiscal year 2024. So it's clearly implied in our guidance that double digit growth continues. In terms of the pattern, it is still true that some of the most strongest brands are what you can categorize as quite luxury, even though it's not always clear whether L'Oreal Piana, Zegna and the BONELO are all the same, I would heavily argue they are not. I stated before, I firmly believe that as we are in fashion, this trend will come to an end at some point.

Speaker 2

And while we have seen great success of a brand like Loyola that does not fit the pattern of quiet luxury, it will also be interesting for the coming season to see how the development how the new Creative Director Valentino is shaping Valentino, the brand itself, but also the market because fashion is about also fashion trends and cycles. So I do believe fashion will come back. I do believe it will be good for the sector. And I also believe the quiet luxury brands will continue because they have a strong relevance for a certain audience, while overall the market has missed some of the more fashion forward aspirational customers and they need to come back.

Speaker 6

Okay, very clear. Thank you. And then just as a follow-up, are you able to just comment how you're thinking about the strength of your balance sheet and how you go about internally approaching or evaluating potential M and opportunities versus organic growth opportunities to the extent that you're able to comment, please? Thank you.

Speaker 2

Happy to address the second question and then Maarten can talk to the balance sheet. So as is evident by our performance and our positioning, we strongly believe that through our organic growth, we can achieve our multiyear targets, can become a multibillion company. So organic growth is the default strategy. We may look at unorganic growth, that is an option, while the focus is clearly on organic, but we will not at this stage comment on any specific M and A opportunity that is out there.

Speaker 1

Understood. Thank you so much. Yes, maybe in addition, Grace,

Speaker 5

I mean, obviously, the balance sheet, no change in the ultimate strength there, 65% equity ratio, very I mean, we don't have any additional bank debt on top of the very operational use of

Speaker 1

the revolving credit facility that we were able

Speaker 5

now to fix for the next years to have a solid base for the growth, replacing the old one. And so we are we continue to have that balance sheet strength with having no more longer term bank debt.

Speaker 6

Great. Thank you, both.

Speaker 2

Thank you.

Operator

As there are no further questions at this time, this concludes our Q and A session. I would like to thank our speakers for today's presentation and thank you all for joining us. This now concludes today's conference call. You may now disconnect.

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Key Takeaways

  • MyTeresa delivered GMV growth of 14.7% year-over-year and achieved positive adjusted EBITDA of €9.2 million (3.9% margin), demonstrating resilience in a challenging macro environment.
  • The U.S. business accelerated sharply with GMV up 41.6%, now representing 22.3% of total GMV, fueled by high-spending wardrobe-building customers seeking multi-brand luxury inspiration.
  • Focus on top customers paid off, with the top customer base growing 17% and average spend per top customer up 3.3%, driving a 20.9% GMV increase in this cohort and a record AOV of €692 (up 8%).
  • Profitability improved through a 12% gross profit increase, a reduction in gross margin slippage (220 bps in Q3 vs. 740 bps in Q1), a lower marketing cost ratio, and a 2.8% decline in customer acquisition cost.
  • Strong partnerships and exclusive activations—including capsule collections with Courrèges and VIP customer events in Paris, New York and Shanghai—reinforced MyTeresa’s position as a preferred platform for true luxury brands.
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Earnings Conference Call
MYT Netherlands Parent B.V. Q3 2024
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