• Net Sales Growth: 13.4% increase in Q2 FY25 compared to Q2 FY24.
• Gross Merchandise Value (GMV) Growth: 11.9% increase to EUR244.7 million in Q2 FY25.
• United States Net Sales Growth: 17.6% increase in Q2 FY25, accounting for 20.6% of total net sales.
• Europe Net Sales Growth: 12.8% increase in Q2 FY25.
• Gross Profit Margin: Increased by 110 basis points to 50.9% in Q2 FY25.
• Adjusted EBITDA Margin: 7.3% in Q2 FY25, an increase of 350 basis points from the prior year.
• Average Order Value (AOV): Increased by 9.5% to EUR736 in Q2 FY25.
• Inventory Levels: Decreased by 1.3% year-over-year with a Days Inventory Outstanding (DIO) of 258 days.
• Adjusted Net Income: EUR10.6 million or 4.8% of net sales in Q2 FY25.
• Operating Cash Flow: Used EUR6.0 million in Q2 FY25.

• Warning! GuruFocus has detected 4 Warning Sign with MYTE.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MYT Netherlands Parent BV (NYSE:MYTE) reported strong revenue growth with a 13.4% increase in net sales for Q2 FY25 compared to the previous year.
• The company achieved a significant improvement in adjusted EBITDA margin, increasing by 350 basis points to 7.3% in Q2 FY25.
• The United States market showed robust performance with a 17.6% increase in net sales, accounting for 20.6% of total net sales.
• MYTE's focus on high-spending, wardrobe-building customers resulted in a 9.1% growth in GMV from top customers.
• The company maintained excellent customer satisfaction with a net promoter score of 83.3% in Q2 FY25.

Negative Points

• The ongoing macroeconomic uncertainties continue to impact results in China and Asia, with slower growth in these regions.
• Marketing costs increased by 160 basis points to 12.3% in Q2 FY25, reflecting higher spending to acquire and retain customers.
• The company experienced a slight decline in the number of top customers year-over-year, despite strong revenue growth per capita.
• MYTE's inventory levels, while managed well, still reflect a high DIO of 258 days, indicating potential inefficiencies.
• The luxury market remains volatile, with concerns about the macro environment affecting overall performance.

Q & A Highlights

Q: What are your thoughts on the technology stack and integration opportunities with the YOOX acquisition? Also, could you provide guidance on gross margins for the second half? A: Michael Kliger, CEO: We plan to integrate YOOX NET-A-PORTER's luxury businesses onto Mytheresa's platform, which is fully owned and operated by us. This re-platforming will take 24 to 36 months. We aim to enhance the brand equity of NET-A-PORTER and others to align with LuxExperience's principles. Martin Beer, CFO: The Q2 performance aligns with our expectations, and we anticipate a stable or slightly increasing gross profit margin in H2, similar to H1.

Q: Can you comment on the current health of the digital luxury market and the demand acceleration in the US and Europe? A: Michael Kliger, CEO: The digital luxury sector is healthy, with continued expansion. We see strong demand in the US and Europe, with double-digit growth in both regions. The market is recovering from last year's high inventory levels, and while Asia, particularly Greater China, lags, the overall industry health is better than a year ago.

Q: How should we think about the timeline for returning to historical high single-digit EBITDA margins? A: Martin Beer, CFO: We had a 4.5% EBITDA margin in H1 FY25, and we guide for 3% to 5% for the full fiscal year. While the industry remains uncertain, we expect to return to higher single-digit margins in the medium term, driven by improvements in gross margin.

Q: Could you discuss the trends among aspirational customers and the impact on marketing spend? A: Michael Kliger, CEO: The US market shows strong growth, and Europe is also seeing double-digit growth, partly driven by aspirational customers. We've increased marketing spend to capture market share, focusing on long-term customer acquisition. This investment lays the foundation for future growth.

Q: What are you seeing in terms of price points and luxury pricing trends? A: Michael Kliger, CEO: We haven't seen a shift towards more entry-level price points. Our growth is driven by high-priced items and big spenders. However, there is a pause in further price increases, as the market seeks to attract aspirational customers with well-priced luxury offerings.

Q: How do you view the future of physical distribution in the context of digital and physical integration? A: Michael Kliger, CEO: Physical presence is crucial for forming strong customer relationships. We focus on digital and physical experiences, such as pop-ups and events. Our new distribution center in Leipzig enhances speed, and regional centers may play a role as we grow.

Q: Can you share insights on the top customer profile by region and average order value? A: Michael Kliger, CEO: Top customers account for about 4% of our base and 40% of revenue, consistent across regions. Average order values are higher in Greater China and the Arabic Peninsula, reaching four digits, while other regions average three digits.

Q: What is the outlook for Greater China, given the current macroeconomic environment? A: Michael Kliger, CEO: We see a slow recovery in Greater China, following significant contraction. The macroeconomic environment is key, and further economic stimulus from the government could accelerate recovery.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.