MYT Netherlands Parent BV ADR

Greetings and welcome to the Mytheresa fourth quarter and full fiscal year 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, sir. Please begin.

Thank you, operator, and welcome everyone to Mitrice's investor conference call for the fourth quarter and full fiscal year 2023. With me today is our CEO, Michael Klieger. Before we begin, I 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 in no duty to update forward-looking statements. In addition, we will refer to certain financial measures not reported in accordance with IFRS on this call. You can find reconciliations of these non-IFRS financial measures in our earnings press release, which is available on our investor relations website at investors.mytresa.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. We will today comment on the results and performance of our fourth quarter and full fiscal year 2023. We are extremely pleased with our excellent results in a very difficult market environment. With strong double-digit growth, and continued profitability, we have surpassed market expectations both for the fourth quarter and the full fiscal year 2023. This performance clearly sets us apart and demonstrates the fundamental strengths of the MyTheresa business model as well as the superior quality of execution. Before I speak to some of the key achievements, let me just point out some highlights of the fourth quarter. We saw high double-digit GMV growth in the United States, achieved double-digit growth in mainland China, grew again our business with top customers over proportionally, and maintained profitability despite some margin pressures. The current consumer environment is clearly characterized by a slowdown of aspirational customer spend increased promotional intensity by many players, as well as ongoing economic uncertainties across the world. Now, more than ever before, our focus on the high-spending, wardrobe-building customer, on a highly curated, inspirational offer, on full-price selling, and on truly money-can-buy experiences to drive customer engagement is proving to be the superior business strategy. I want to leave you today with three key messages allowing you to have a clear view on the strengths and health of our business. First, our unique positioning as a digital platform focusing on big spending, wardrobe building customers continues to generate global growth, even in very challenging economic circumstances. This is evident in our excellent top customer growth and double-digit GMV expansion across all geographies. Second, the sheer number and quality of brand collaborations as well as money can buy experiences and activations in the fourth quarter allowed us again to significantly increase our brand equity across the globe, but particularly in the United States. Third, With the successful transition to a completely new technology stack in the fourth quarter and the successful test runs in our new state-of-the-art distribution center at Leipzig Airport, we have put in place and almost fully paid the foundations for future multi-year growth and service improvements for our business. Sector-leading growth, strong profitability and ongoing investments into the future sets us clearly apart from peers. Let me now comment in more detail on these three key messages for today. First, in the fourth quarter, we grew our gross merchandise value, GMV, by plus 13% compared to Q4 fiscal year 2022. For the full fiscal year, our GMV growth reached plus 14.5%, compared to full fiscal year 2022. This strong double-digit growth is above market expectations and sets us apart. Our consistent growth momentum in fiscal year 2023 is evidenced also by the high two-year growth rate in GMV of plus 33.6% in the fourth quarter and up plus 38.9% for full fiscal year 2023 compared to fiscal year 2021. It is also highly noteworthy that the United States generated again an outstanding GMV growth with plus 40.8% compared to Q4 of fiscal year 2022. The United States has become a major growth driver for our business despite the market slowdown and accounted for 19.1% of our total business growth in the fourth quarter of fiscal year 2023. The driver for these excellent results is our continued focus on the big spending, wardrobe building top customer and not the aspirational, occasional luxury shopper. Our top customer base grew by plus 24.2% compared to Q4 of fiscal year 2022. The average spend per top customer in terms of GMV grew by plus 3.7% in the fourth quarter of fiscal year 2023. Overall, the business with top customers grew by plus 28.7% in terms of GMV compared to Q4 fiscal year 2022. Over the last three years, we have grown our business with top customers by plus 58.3% in full fiscal year 2021, plus 26.8% in full fiscal year 2022 and now plus 30.1% in full fiscal year 2023. The share of top customers in our business in terms of GMV has increased from 32.6% in full fiscal year 2021 to now 38.5% in full fiscal year 2023. Fully in line with our focus on big spending customers was the launch in the fourth quarter of our exclusive partnership with Bucherer, the world's largest luxury watches and jewelry retailer from Switzerland, to offer certified pre-owned watches with an international two-year warranty and full service package directly from the watch experts of Bucherer. The offer initially launched in Europe and covers the most elevated selection of high-end and certified pre-owned timepieces from brands such as Audemars Piguet, Breitling, IWC, Schaffhausen, Jaeger, LeCoultre, and Omega. So far, the most expensive watch sold on our platform was an €86,000 Audemars Piguet Royal Oak watch In line with our high-end strategy, our average order value increased by plus 4.5% to a record high of €654 for the full fiscal year 2023 compared to fiscal year 2022. This is not just driven by our continued expansion into new luxury categories, such as the recently and successfully launched home and lifestyle category, but also by the preference of top customers for more expensive items. Second, the fourth quarter saw an unprecedented number of high impact campaigns, exclusive product launches and events as well as money can buy experiences. All of them further increased our brand awareness and brand equity as well as clearly positioned us globally as a leading digital luxury platform. The fourth quarter We had the exclusive launch of styles from Loewe's Paola's Ibiza collection, the launch of an exclusive 84-piece capsule collection from Dolce & Gabbana, only available at MyTeresa, the launch of an exclusive capsule collection from Zimmerman on MyTeresa, the exclusive launch of pink PP styles from Valentino, only available at MyTeresa, the exclusive launch of the Shark Lock Cowboy Boots by Givenchy, only available at MyTheresa, and the launch of exclusive styles from Etro on MyTheresa. Please see our investor presentation for more details on brand collaborations. We also hosted, again, many exclusive events for our top customers, providing them with money and buy experience. Examples of events in the fourth quarter are include a dinner and party to celebrate the launch of Loewe's Paula's Ibiza collection with the creative director, Jonathan Anderson, attending at the Sheetz Goldstein residence in Los Angeles. A two-day experience for top customers in Rome in partnership with the Maison Valentino, including an exclusive private tour of the archives of the Maison in Rome, as well as events in New York, Stockholm, and Saint-Tropez. The most significant and also biggest event ever in terms of global press and social media reach was a three-day experience in Portofino in partnership with Dolce & Gabbana to celebrate the launch of the 84-piece exclusive capsule collection. The three days included a private cocktail reception by Domenico Dolce and Stefano Gabbana at their home in Portofino, as well as a one-hour fashion show for the capsule collection staged at the famous Piazzetta in Portofino for celebrities, customers, and press, exclusively created for MyTeresa by the two designers. Please see our investor presentation for more details on events in the fourth quarter of 2023. A big focus for our brand-building efforts, as evidenced by the number of events we hosted there, continues to be the United States, which is a key market to drive growth for MyTheresa. In order to engage and build personal relationships with high-net-worth customers, we hosted our first-ever five-week pop-up in partnership with Flamingo Estate in East Hampton in the months of July. we converted the former auto body repair shop into a summer body shop offering a highly curated selection of merchandise as well as hosting over 15 events in the location with partners such as Oscar D'Aralenta, Dr. Barbara Sturm, Louis Miller, the Hamptons Magazine, as well as featuring Porsche and Ferrari cars. In total, we welcomed over 3,200 registered selected guests, over five weeks. Please see our investor presentation for more details on the pop-up in East Hampton. Third, the fourth quarter saw again several key milestones for our business that will drive significant future growth, service improvement, and profitability for my tourism. As announced in the last earnings call in April, we successfully concluded a multi-year project to upgrade our complete e-commerce technology stack. We migrated all our websites, apps, content management systems, merchandising, and product information systems to a new service-based and highly scalable platform that is managed by us directly and will allow us to improve speed, flexibility, personalization, regionalization, and cost of IT development. The transition to the new platform was achieved with minimal disruption to our business, which is a testament to our excellent in-house technology capabilities. As anyone can tell, it has gone through a similar large-scale technology upgrade process. Over the coming months, we will more and more leverage our new technology platform for growth and margin improvement. With our Bucherer partnership, we not only entered another luxury category in the fourth quarter, offering certified pre-owned watches, but also onboarded another company successfully to our curated platform model, CPM. This time, even with inventory sitting in the stores of a partner. In addition, we continue to operate successfully seven fashion brands on the CPM. Another huge milestone for the company was achieved with the opening of our new distribution center at Leipzig Airport. I'm happy to announce today that the construction has been completed and that we started test operations in the new facility already in August. As of Monday, September 4th, we have actually started shipping customer orders from this site. We will ramp up now the operations over the coming months. Just as a reminder, the new facility with its 55,000 square meter of building space will not only provide ample capacity for the future growth of our business, but it will also dramatically improve customer service thanks to its unique location in direct adjacency to the international air freight hub of DHL. We will benefit from significantly later cutoff times for international deliveries, additional flight options to the United States, and faster return processing from customs destinations. Already in the second half of fiscal year 2024, we should see the positive impact of the new facility on our business. All the milestones mentioned will further increase the high cost variability in our business model. Martin will provide in a moment more details on our cost management despite some inflationary cost pressures and how all this translated into our strong bottom line results for the fourth quarter fiscal year 2023 and the full fiscal year 2023. With all the above, it should come as no surprise that we are extremely pleased with our excellent performance in the fourth quarter fiscal year 2023 and the full fiscal year 2023, despite significant macro headwinds. We believe that our results demonstrate the strengths and consistency of our business model, delivering profitable growth. We see ourselves as one of the few winners in the expected consolidating luxury e-commerce space. This also drives our strong confidence in our medium-term growth trajectory and profitability levels, despite the short-term uncertainties in the current environment. And now I hand over to Martin to discuss the financial results in detail.