Mytheresa, the Munich-based luxury website, on Tuesday reported that strong sales from top spending, high income customers, especially in the U.S., were offset by margin pressures and a slowdown in shopping by aspirational customers, leading to a loss in its fiscal first quarter.
The net loss deepened to 11 million euros in the quarter ended Sept. 30, from a net loss of 3.8 million euros in the year-ago period. However, on an adjusted earnings before interest, taxes, depreciation and amortization basis, the company only lost 800,000 euros, compared to a profit of 12.7 million euros in the year-ago period.
Net sales gained 6.8 percent to 187.8 million euros in the latest fiscal quarter, from 175.9 million euros in the year-ago period. On a constant currency basis, net sales grew 12 percent. Gross merchandise value rose 3.1 percent to 204.1 million euros last quarter from 197.9 million euros. GMV grew 8 percent on a constant currency basis.
For the full fiscal year, which ends June 30, 2024, Mytheresa confirmed its guidance for GMV and net sales growth in the range of 8 to 13 percent, gross profit from 8 to 13 percent, and adjusted EBITDA margin in the range of 3 to 5 percent.
Watch on FN
Between the sales gain and the guidance, Wall Street was impressed, lifting Mytheresa’s stock price nearly 3 percent in pre-market trading to $3.07.
The nearly 7 percent sales gain last quarter, chief executive officer Michael Kliger told WWD, “puts us in a really good spot, considering that most of our peers are reporting negatives and shrinking top line. So a plus-seven is very good. We also reported 25 percent growth in the U.S., our best-performing market, where we see great progress. And this is an even better number considering some of the numbers we hear coming out of the U.S. This is fueled by our focus on the big spenders. So in terms of numbers, our top customers, our highest tier spenders have grown by plus 19 percent, globally, and in the U.S., our top customer numbers grew by 56 percent. So it is really this focus which helps us navigate a time where there is a slowdown in the market. The slowdown is of course very much caused by the aspirational customer, the occasional spender. And so we are mitigating this trend, which is evident in our numbers.”
Kliger said that for the last 12 months, “a 3.8 percent share of the customer base, our top customers, accounted for 39.4 percent of Mytheresa’s gross merchandise value, or total business.”
Kliger said Mytheresa’s top customers average close to six digits in annual spend on the website. “If you hit that number, you are a top customer.…We don’t publish the exact numbers.” He added that there are customers who spent far beyond that.
“We are very happy with the top line globally, particularly in the U.S., Kliger said, adding, “What is true is that we are seeing margin pressure. There is a promotional intensity in the market. Winter sales started in October so we have seen ongoing promotions. The product margin has dropped significantly.”
Still, there were several advancements and innovations during the quarter, among them the opening of a second distribution center, which is in Leipzig, Germany; exclusive capsule collections and pre-launches with Brunello Cucinelli, Loro Piana, Manolo Blahnik, Loewe and The Row, among others, and some activations supporting the exclusive capsules, including a four-week pop-up experience last summer in East Hampton, N.Y., and another being staged in Los Angeles. Mytheresa also had an exclusive launch of Bucherer Fine Jewelry as part of an overall partnership with the brand and a strategic expansion of the fine jewelry assortment with 30 new brands being added in the coming months.
“We do believe that as a digital player, you also need these moments where you meet clients. That’s why we had this four-week pop-up in East Hampton in the summer. And we will actually open next week our Holiday House in Los Angeles for three weeks. With activations and collaborations we will continue on that track with a particular focus on the U.S. Our growth in the U.S is tremendous.”
Asked if those activations would be a prelude to permanent stores, Kleiger replied, “No, at the moment, we believe being at the right place for a short time is the right approach.”
Addressing market conditions, Kliger cited a slowdown among “aspirational customers, the occasional customer,” whereas the more affluent at the high end, “wardrobe builders” as he said, are not yet affected. “There is a tale of two customer segments, and that drives what sells and what doesn’t,” Kliger said.
The big spenders, the CEO explained, are much more focused on the highest-quality, higher-price brands that have a strong DNA and ready-to-wear. “So that’s why Loro Piana, Brunello Cucinelli, Tom Ford, The Row, they all the favorites at the moment. The high-end customers continue to spend for let’s call it the ‘epicenter’ of the market, much more in these quiet luxury brands.”
He summed up his company’s fiscal first-quarter performance around zero profitability on an adjusted EBITDA basis which “in relative terms is excellent,” a good top-line performance particularly in the U.S., margin pressure evident, and a continued story of focusing on top customers, the U.S. and on innovations.
“We are still expecting a profit for this fiscal year. But we feel very comfortable without any debt to have a slight loss in a market where we see big red numbers at the moment. So we know that in relative terms, this is pretty good and we believe in the first six months of next year the market will improve and therefore we still guide for profitability for fiscal year 2024, which ends next June.”
In his prepared statement, Kliger said, “We are pleased with our results in a very difficult macro environment. With our positive revenue growth and a small adjusted EBITDA loss, we demonstrated the fundamental strength of our business model compared to peers. As expected, we saw a continued slowdown in demand with aspirational customers across all geographies and a high promotional intensity in the market.
“We achieved strong double-digit revenue growth in the United States, grew again our business with our global top customers over-proportionally and managed to mitigate significant margin pressures with cost reductions. With our resilient business model and our focus on the high-spending, wardrobe building customers, we will be best positioned to benefit and accelerate when market conditions improve.”
This story was reported by WWD and originally appeared on WWD.com.
