Mytheresa’s Operations Turn Profitable for Fiscal Q1
Citing strength in the U.S. market and robust sales among its top spending customers, Mytheresa‘s operations turned profitable during the luxury website’s fiscal first quarter.
“Our profitability has improved significantly versus the previous year,” Michael Kliger, Mytheresa‘s chief executive officer, told WWD in an interview. “There’s been a continuation of improvements in our business. We are very pleased.”
Adjusted net income rose to 5.4 million euros in the three-month period ended Sept. 30, compared to a loss of 3.3 million euros in the year-ago period. The EBITDA margin stood at 1.4 percent compared to negative 0.6 percent in the year-ago period, a gain of 200 basis points.
Mytheresa did have a net loss of 23.5 million euros, but that was primarily due to the more than $20 million in legal and other costs associated with the pending purchase of Yoox Net-a-porter from Compagnie Financière Richemont. Other costs included impairment loss on property and equipment and share-based compensation.
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Net sales grew 7.6 percent to 201.7 million euros in the quarter, up from 187.5 million euros in the prior-year period. Gross merchandise value grew 6.3 percent to 216.6 million euros.
The gross profit margin increased 150 basis points to 43.9 percent, from 42.4 percent in the prior year period, reflecting what Kliger said was “reduced promotional intensity versus last year.”
In another key metric, Mytheresa’s average order size increased by 9 percent to 720 euros, which Kliger said was an all-time high for the Munich-based business.
Asked what’s driving Mytheresa’s growth when much of the luxury sector is in decline, Kliger said: “Our geographic profile is more beneficial, with the U.S. representing 20 percent, and Europe, 50 percent so 70 percent of our business sits in healthy regions. We are far less exposed to China and Asia than some of the big luxury groups that are reporting no growth at the moment.
“The U.S. continues to be super strong where we have double-digit revenue growth — 14 percent plus,” Kliger said. “The U.S. now accounts for 20 percent of our business, so it is our biggest region now, and it continues to show great results. It became our largest region two quarters ago.
“Europe also had a good showing, at plus 9 percent,” he said. “Asia and China are still negative.”
“The second big driver [of growth] is the focus on our big spenders,” Kliger said. “In Europe and the U.S., we are looking at very healthy growth with this type of customer. We don’t see any signs of that abating” based on business results early in the second quarter.
Mytheresa’s global business with its top spenders, who represent 4 percent of the company’s customer base, grew 18 percent, Kliger said.
In the U.S. alone, Kliger said, “Our top customer business grew by 41 percent, which is a combination of larger spends per customer, but also increasing the base. Our top customers spend in the neighborhood of six digits.”
Mytheresa’s top spenders are avidly buying occasion-oriented ready-to-wear, including dresses, tailored clothing and shoes. “Heels are back,” Kliger said. On the men’s side, labels with the finest, high-end materials, including Loro Piana and Brunello Cucinelli are selling well, particularly with coats.
“Another ready-to-wear sub category that is going really well is beach wear, summer wear, particularly in the U.S.,” for those planning vacations, Kliger said. Cruise wear will be launched next month.
“We are campaigning for the holidays, but more in the sense of the type of clothes. We are launching a lot of exclusives for festive wear,” including Victoria Beckham last week, and Loro Piana eveningwear, he said. “We don’t celebrate festive seasons. We celebrate the clothes for festive seasons. We started that four weeks ago.”
Now that the presidential election has come and gone, business will strengthen.
“One good thing about the election was that after all the ballots were closed, you had your result. I think that was a big relief. We are not in limbo. As business leaders, the worst thing is uncertainty. If you know the new government does this, you can work with that. If you know that the new government won’t do that, you can work with that. But uncertainty is the worst for the consumer economy.”
Prior to the election, “I think people were in a hold position,” as far as spending much, Kliger said.
As reported last month, Mytheresa will acquire 100 percent of Yoox Net-a-porter group from Richemont in exchange for 33 percent of Mytheresa’s share capital. Mytheresa will also receive YNAP’s 555 million euros cash on hand and a six-year revolving credit facility of 100 million euros to finance YNAP’s general corporate needs, including working capital. In addition to the shares, Richemont will also have the right to nominate a member and an observer to the Mytheresa board following the close of the deal.
“We continue to expect that the closing will happen in the first half of 2025,” Kliger said. “The filings are done, and now it’s for the different authorities to review.…Richemont will give us the assets with cash funding of 555 million euros,” bolstering the balance sheet.
“We truly believe in the power of the brands, but there is stuff to be done,” said Kliger, referring to the difficulties Yoox Net-a-porter has been experiencing with its operations. “There is some fixing to be done.…The other part that is also interesting for us is that Richemont is taking a significant share stake (33 percent) in Mytheresa. That is a strong vote of confidence in Mytheresa.”
