MYT Netherlands Parent BV ADR

Greetings and welcome to the MyTheresa first quarter of fiscal 2023 earnings conference call. At this time, all participants are in a listen-only mode. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. It is now my pleasure to introduce your host, Martin Beer, MyTheresa's Chief Financial Officer. Thank you and over to you, sir.

Thank you, operator, and welcome everyone to Mitrice's investor conference call for the first quarter of fiscal year 2023. With me today is our CEO, Michael Klieger. Before we begin, we would 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. Many factors could cause actual results to differ materially. We are under no duty to update forward-looking statements. In addition, we will refer to certain financial measures not reported in accordance with IFS on this call. You can find reconciliations of these non-IFS financial measures in our earnings press release, which is available on our investor relations website at investors.mytheresa.com. I will now turn the call over to Michael.

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 first quarter of fiscal year 2023. We are extremely pleased with our results. Our business has shown excellent strengths and resilience in ongoingly challenging economic and geopolitical times. MyTheresa has accelerated its top-line growth in the first quarter of fiscal year 2023, which is the continuation of what we saw in previous quarters. Furthermore, we delivered in the first quarter once more very good profitability. Given what we see in the broader consumer sector and with other digital businesses, we believe that MyTheresa is a truly differentiated business with a unique customer focus, a highly adaptive business model, and outstanding operational excellence. These qualities make us confident to deliver against our communicated targets for full fiscal year 2023 despite clear challenges in the macro environment. I will today provide you with details on these three key qualities as evidence in the first quarter of fiscal year 2023, so that you can fully appreciate the strengths and health of the MyTheresa business. First, our sole focus on the high-end luxury sector, both in terms of customers as well as brands, make us foremost a luxury business and not just a digital business. Our events, brand exclusives and customer KPIs in the first quarter will speak to this. Being luxury explains why we are in many ways protected from the challenges and uncertainties in the macro environment. This is evidenced by very strong and sustainable growth in the first quarter unlike more middle-market-oriented digital businesses. Second, we have created a very diversified and agile business model. We are global, we are focused on free price selling, and we have a high share of cost variability. Therefore, we can expand our business along many growth vectors while at the same time delivering outstanding profitability positive cash flow, and high return on invested capital. Third, a key success factor for MyTeresa has always been the operational excellence in the business. This can be seen in our once again outstanding operational KPIs in the first quarter, the high customer satisfaction, and the many trust-based relationships we enjoy with luxury brand partners. Let me now comment in more detail on these three key qualities of the MyTheresa business. First, let's look at the very strong and sustainable growth in the first quarter. We grew our gross merchandise value, GMV, by plus 20.8% compared to Q1 fiscal year 2022. This is a clear acceleration versus the Q3 growth rate of 13.2%, and the Q4 growth rate of 18.2% on fiscal year 2022. This accelerated growth in the first quarter clearly sets us apart from other digital businesses in the same period. It is driven by the sole focus on true high-end luxury customers and not on the peripheral, occasional luxury shoppers. The latter are and will be impacted significantly by economic downturn, while the true luxury customer is more resilient. In the first quarter of fiscal year 2023, our top customer base grew by plus 22.7% compared to Q1 of fiscal year 2022. The average spend for all customers grew by plus 6.5% in the first quarter of fiscal year 2023 compared to Q1 of fiscal year 2022. In that sense, the lower growth of plus 12.5% for the full customer base during the quarter did not matter as much as it was driven by slower growth in occasional luxury shoppers. To engage and serve our high-end customer base, or as we call them, the luxury wardrobe builders, we partnered again with many leading luxury brands for exclusive collaborations. We produced impactful digital content and campaigns that created visibility for the brands to reach our unique high-value multi-brand customer base, which cannot be easily reached by pure monobrand offerings. Our clear focus on high-end customer engagement is ultimately the key reason for luxury brands to continually partner with us. Examples for exclusive brand collaborations from the first quarter include the launch of the exclusive eyelet bags from Gucci, exclusive fall-winter styles from Loewe and Moncler, as well as the pre-launch of the highly anticipated new collection of creative director Mathieu Blasi of Bottega Veneta, giving MyTheresa customers exclusively first access. We were also the exclusive launch partner for the Love Trotter bag from Etro, It was featured on the very first runway show of the new designer, Marco Di Vincenzo, and exclusively available on MyTheresa on the day of the show. Please see our investor presentation for more details on brand collaborations in the first quarter of fiscal year 2023. Our unique ability to excite and engage through such unique brand collaborations with true high-end luxury customers and then build long-lasting relationships, provide us with a very sustainable and growing revenue base. This comes on top, of course, of the continued shift of luxury consumers to online shopping. Bain and Altagamma predict that by 2025, still only 30% of the personal luxury goods spent will be online. Second, let's look on the very diversified and agile MyTheresa business model. In the first quarter of fiscal year 2023, we grew across all categories, such as women's wear, men's wear, and kids' wear, as well as our recently launched life category featuring home and lifestyle products. Also in terms of geographic presence, we continue to see growth in all regions, in the United States, which is one of our key growth markets, we achieved again an above average GMV growth with plus 28.5% compared to Q1 of fiscal year 2022. We drove this growth with a strong lineup of customer and brand events across the United States. Please see our investor presentation for more details on our events in the first quarter of fiscal year 2023. We also partnered with Women's Wear Daily during New York Fashion Week for physical and digital marketing activities and hosted a high-impact lunch for designer Gabriela Hirst at the Eleven Madison Park restaurant. Additionally, in July, we announced Steven Zhu as our new president for China and Asia Pacific as a clear commitment to invest into this region. We grew our team of personal shoppers and marketing staff for China in the first quarter. Despite the ongoing COVID-related challenges for customers, our mainland China GMV grew by plus 22.5% in the first quarter of 2023 compared to the first quarter of this year, 2022. In two days, we will actually launch the Chinese Designer Program by MyTheresa to support and create visibility for Chinese luxury designers as well as raise our public profile in China. Please see our investor presentation for more details on this significant and highly publicized program. In terms of business model diversity, we not only grew our life category on the basis of a dropship model, but also continue to expand our curated platform model CPM to now seven brands in the first quarter of fiscal year 2023. Just as a reminder, the CPM allows us to curate and serve our customers as we do under the wholesale model, while the inventory ownership remains with the brand, which allows for better inventory management and control for them. As in the previous quarters, we achieved our GMV growth with a continued focus on full price selling. Our average LTM order value increased by plus 5.4% in the first quarter of fiscal year 2023 compared to fiscal year 2022. The repurchase rates of new customer cohorts acquired in Q4 fiscal year 2022 show positive trend versus Q4 fiscal year 2021 cohort in the respective first quarter. Please see our investor presentation for more details on the cohort repurchase rates. Our customer acquisition costs only increased moderately by 6% in the first quarter. And finally, we achieved our growth with a very healthy gross profit margin, which was 90 basis points higher in the first quarter of fiscal year 2023 compared to fiscal year 2022. All these KPIs Demonstrate the agility of our business model. Martin will talk in a few minutes about how all this translated into excellent bottom line results for the first quarter of fiscal year 2023. Third, let's look at the key strengths of MyTheresa, the operational excellence in the business. A key indicator for this is customer satisfaction, which reached an outstanding level as measured internally with a net promoter score of 81.0% in the first quarter of fiscal year 2023. This is only achievable with a very high consistency and quality across all functions, and in particular, Wales operations, customer care, and technology services. Furthermore, high customer satisfaction for our top customers is achieved by the flawless execution of true money can buy experiences for them. Examples for these in the first quarter include the celebration of Victoria Beckham's first show in Paris as a star-studded guest list, including Eva Longoria, Gigi Hadid, and many more. The sponsoring of the Christian Louboutin exhibition in Monaco accompanied by a dinner for our top customers with the iconic shoe designer Christian Louboutin himself. And a weekend experience for top customers in Solomeo, the home of Brunello Cucinelli, including being part of his personal birthday party. Finally, operational excellence today also means continual progress against sustainability requirements. Mytheresa recently published its first positive change report. Some of the highlighted achievements in this report for fiscal year 2022 include a 34% decrease of CO2 emissions per order shipped, achievement of carbon neutrality for the company, 90% usage of renewable electricity in the company, 57% women in leadership positions, and more than 2 million Euro worth of products resold by our customers by our partnership with Vestiaire Collectif. Please see our investor presentation for more details from the MyTheresa positive change report. With all the above, it should come as no surprise that we strongly believe in our communicated targets for full fiscal year 2023. We are extremely satisfied with our performance in the first quarter. We believe that our results demonstrate the fundamental strengths and consistency of our business model, delivering profitable growth. We see ourselves as one of the few winners in the clearly consolidating luxury e-commerce space. And now I hand over to Martin to discuss the financial results in detail.