Hello everyone, and welcome to Mister Spex Second Quarter 2025 Results Call. Note that this call is being recorded. After the speaker's prepared remarks, there will be a question- and- answer session. If you'd like to ask a question, please press star followed by one on the telephone keypad. I'd now like to hand the call over to Irina Zhurba, Head of Investor Relations. You may now go ahead, please.
Great. Good morning everyone, and thanks, Ellie. Welcome to our Q2 2025 Results Call. As always, the presentation will take roughly 30 minutes. We'll allow an additional 10 minutes- 15 minutes for the Q&A. As usual, you can always find the presentation, the report, the financials, all on the investor relations website. Of course, if you have any questions, please reach out to me directly. I'll always be happy to support you. With me here today, I have Tobias Krauss and Stephan Schulz-Gohritz, who will take you through today's presentation. That said, let me hand over to Tobias to begin with today's call. Thank you.
Thank you, Irina. Good morning, ladies and gentlemen. Welcome to the presentation of Mister Spex's Results for the Second Quarter 2025. My name is Tobias Krauss, and I'm pleased to guide you through our latest developments today. For the next hour, we've prepared the following agenda for you. First, I will address the adjustments to our annual forecast. Next, I will provide a strategic update and explain the charts related to our SpexFocus program. After this, my colleague Stephan Schulz-Gohritz will guide you through the financial update. Finally, we will have ample time for your questions. Let's start directly with the most important point. Ladies and gentlemen, as you can see on the slides, we have decided to adjust our revenue forecast for the full year 2025. In the top box, you can see the change.
We now expect a revenue decline of between -10% to -20% compared to previous forecasts of -5% to -10%. The main reason for this is the challenging market environment with a strong promotional pressure, which we are consciously choosing to avoid. Now for the crucial point, which is highlighted by the two lower graphics, we are sticking to our profitability and liquidity targets. As you can see in the middle, the forecast for the EBIT margin remains unchanged in the range of -5% to -15%. On the right, we confirm our target for cash and cash equivalents at year end of around EUR 65 million. The message of this graphic is clear. We are sacrificing short-term revenue for long-term stability and profitability. We have maintained our pricing discipline, protected our gross margin, and strengthened our cash management. This strategy is working.
Despite the decline in revenue, we have achieved remarkable operational progress in the second quarter. We achieved a positive EBITDA of EUR 0.4 million. EBIT improved by EUR 3 million year-on-year. The gross margin increased by over 500 basis points to 53.7%. We also report a positive operating cash flow and a strong liquidity position of EUR 65 million. Strategically important, 46 of our 65 stores are now EBIT positive. Furthermore, our subscription model for prescription glasses and sunglasses was successfully launched online and offline. These successes are the direct result of our transformation program, SpexFocus, the progress of which I will now explain to you using the following charts. This chart visualizes the journey we have undertaken over the last 12 months. It shows the most important milestones and their direct impact. We started in August 2024 with SpexFocus to shift our focus to profit-driven results.
This has already led to an EBIT improvement of EUR 6 million in the first half year of 2025. In September 2024, we launched SpexPro, our premium private label for lenses. As you can see at the bottom, SpexPro already accounts for 15% of our net revenue today. In Q4 2024, we focused on cost discipline and restructuring, which led to a 90% reduction in headcount. In May 2025, we introduced our subscription model, which already generates over 10% of store sales. In June 2025, the Eye Health check followed, which shows an impressive 64 conversions to order. This chart demonstrates a consistent implementation of our strategy, which is delivering measurable results. Let us look at the concrete financial impacts of these strategic initiatives. The figure on the slides proves the disciplined execution and success of our program.
In the first half year of 2025, SpexFocus has led to an EBIT improvement of EUR 6 million. This improvement is not a single metric, but the result of a targeted measure in three core areas. The largest level with plus EUR 3 million was the improvement in store performance and lower discounts. Initiatives like the launch of our private label SpexPro and the Mister Spex Switch subscription have significantly strengthened prescription glasses and improved margins. Secondly, the rationalization of our store portfolio has directly contributed to the results. Through the targeted closure of underperforming stores, we have improved EBIT by a further EUR 1 million. Thirdly, organizational optimization through right-sizing and cost-cutting has increased the results by another EUR 2 million. It is also important to look ahead. We see further potential and expect a total EBITDA impact of over EUR 20 million from the entire program for the years 2025 and 2026.
This bar chart is perhaps the most impressive proof of our strategy's success at the operational level. It shows the development of our stores' profitability over the last six quarters. Let's first focus on the top dark green bar. This represents our most profitable stores with an EBIT margin of over 10%. In the first quarter of 2024, there were just nine such stores. If you look now and away on the way of the right, to the second quarter of 2025, you'll see that this number has risen to 31 stores. This is more than a threefold increase and a record for us. Now let's look at the opposite.
The bottom light brown bar, which represents the stores with a margin less than - 10%, here we have achieved a drastic reduction in some periods in the same period, from 32 stores in Q1 2024 to just nine in the last quarter. This means we have fundamentally improved the structure of our store network. Around 90% of our stores are now break-even or profitable. The drivers for this development are clear: a better product mix through SpexPro, consistent pricing discipline, and operational efficiencies. To conclude my strategic update, I would like to show you the results of our most innovative and new product, the Mister Spex Switch subscription model. This infographic shows what a value customer base we are building with it. Top left underperforming. The average order value, AOV, is approximately EUR 570, more than double than a non-subscription purchase at EUR 230.
This leads to twice the absolute gross margin. On the right, in the post-customer profile, we are attracting an extremely attractive target group. 42% are new customers, but more than half are over 40 years old and have a strong purchasing power. At the bottom, under buying behavior, the model drives the sales of high-margin products. 67% of purchases are prescription glasses, and half of all customers choose our high-quality SpexPro lenses. Switch is therefore a crucial level to differentiate ourselves from the competition and to win high-value, loyal customers. Ladies and gentlemen, in summary, we are navigating a challenging market environment, but remain true to our story. The focus on profitability and cost discipline through SpexFocus is delivering clear, measurable results. With that, I will now hand over to my colleague Stephan Schulz-Gohritz, who will give you a detailed insight in our financial figures.
Thanks, Tobias.
Ladies and gentlemen, from a financial perspective, the key highlight is that Q2 shows sequential improvements quarter and quarter and continues to deliver improvements in the second quarter in a row. Let's have a look at the net revenues first. Net revenues are down by 22%, driven by two major factors. Number one, increased competition, specifically online, and number two, driven by a conscious decision that we have taken in the management to let go unprofitable business. Overall, Germany went down by 16%. Our offline business, like for like, however, was running flat. International was down by 41%, and here we got basically a double hit, number one, by the closure of our international stores, which happened last year in the fourth quarter, and number two, the price discipline in extraordinary price-sensitive markets.
The reduction of unprofitable business, the improved product mix, and also the cost reductions under SpexFocus led to an EBIT improvement of EUR 3 million year-on-year in the second quarter. Overall, the EBIT is now at - EUR 4.3 million. Also, the free cash flow improved by EUR 1.2 million, supported by operational improvements and reduced IT and tech investments. Cash and cash equivalents are at EUR 65 million, which is a strong liquidity to support ongoing transformation and growth. Let's have a look at our business segments. First, Germany, which is our key market. Germany is down by 16%, specifically online, - 24%, and our offline business showed a growth of 2 percentage points. Overall, if you look at the categories, we have achieved a product mix improvement. You can see that prescription glasses reduced underproportionately by - 4%, sunglasses - 28%, and contact lenses by 14%.
With the margin, product mix improvement, the price discipline, and also the introduction of SpexPro in the second half of last year, we achieved a significant margin improvement of 5 percentage points. Let's specifically have a look at our offline business. Offline was running flat in the second quarter. Specifically, it was held back by our sunglasses business. It's important to understand that the second quarter is the sun season, and specifically sunglasses were performing underproportionately, and that basically led to the fact that the growth in prescription glasses was compensated by the decline in sunglasses. If you look into the prescription glasses, we can say that the store sales grew dynamically by 7%, and the AOV even more by 23% compared to the second quarter year-on-year. Sunglasses store sales overall declined by 6%. However, the AOV grew by 8% year-on-year.
Overall, we can say that our online business is impacted by price pressure in the market and by our conscious decision to let go unprofitable business. Whereas we can say that the offline business and the KPIs in the offline business are showing in the right direction. Let's have a look at international. International went down by 41%. As I said already, it's a double impact from the store closures, number one, and number two, from the price repositioning, specifically in highly price-sensitive markets. Prescription glasses were impacted specifically by the store closures and the online business, sunglasses and contact lenses, specifically by their price repositioning. This is reflected in the middle chart here. You can see that prescription glasses went down by 34%, the sunglasses by 55%, and the contact lenses by 27%.
Overall, however, that led to a significant gross margin improvement by 340 basis points in prescription glasses and more than 500 basis points in sunglasses. Let's have a look at the P&L for the second quarter. Overall, the gross profit is at EUR 28.4 million, which is a reduction by EUR 4.5 million, basically driven by the top line and partially compensated by the higher gross profit margin. Our personnel expenses improved by EUR 2 million. Here we have to take into consideration that we had gotten the payments of EUR 1 million in the second quarter. Marketing expenses are down by EUR 700,000. Here we have to take into consideration that we supported the Switch launch in June with EUR 700,000, specifically in marketing expenses. Operating expenses are down by EUR 3.2 million and depreciation and amortization by EUR 1.9 million. That gives an overall EBIT improvement of EUR 2.9 million.
How does this translate into H1? H1 overall gross profit is at EUR 53.6 million, which is a reduction of EUR 4.9 million in gross profit. The gross profit margin overall improved by 480 basis points. Personnel expenses improved by EUR 2.5 million here on the half year. If you look at the half year, we have to take approximately EUR 2 million off-garden leaf payments into consideration. If we exclude those payments, then we can fairly say that personnel expenses are down by 14%. Marketing expenses down 20% or EUR 2.5 million. Operating expenses down 21% or EUR 4.5 million. Depreciation and amortization down by EUR 3.3 million, basically driven, number one, by the year-end depreciations and impairments, which led to lower depreciations now and also less CapEx and investments. Overall, this gives us an EBIT improvement of EUR 5.9 million, which is now as half a year at -EUR 10.6 million.
Another highlight is the operating cash flow, which turned positive. Last year, - EUR 0.2 million, now we are at EUR 2.7 million positive, which is a positive change of EUR 2.9 million. Also, the investment cash flow improved by EUR 1.6 million. Financing cash flow was basically flat. That gives us an overall improvement of EUR 4.4 million. Overall, we can fairly say that we reduced the cash burn by 40% in the first half of the year. Now, let me conclude. Q2 is one more milestone of sequential improvements, building the foundation for sustainable profitability. Our adjusted guidance for 2025 remains unchanged. Net revenues, a decline of -10% to -20%. The EBIT margin, -5% to - 15%, and cash and cash equivalents at EUR 65 million ± EUR 5 million. Let me look into Q3. Q3 will be supported by another improved product mix with a higher share of prescription glasses versus Q2.
However, sunglasses and the online channels further remain under pressure. Thank you for your attention, and now we are opening up for Q&A.
Opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. Your first question comes from the line of Amira Manai of ODDO BHF. Your line is now open.
Yes, thank you so much for the presentation. I have actually two questions. The first one is, you mentioned that 46 of 65 stores are EBIT positive, versus 34 in Q1, which is encouraging progress. For the remaining 23 stores, how many are close to break-even? What concrete measures are you implementing to bring them to profitability, and when do you expect them to reach break-even? In case that profitability cannot be restored in some of those stores, are some closures being considered? The second question is regarding SpexFocus. We know that it will be an improvement. We will have an improvement of potential more than EUR 20 million on an annualized basis. Could you provide more details on the cost-saving achieved so far and what remains to be captured?
Thank you.
Let me take the first one. Thanks for your question. As you can see from the last quarters, there has been a great development when it comes to our store portfolio. Numbers of stores basically remained the same. We reduced one store, which was not profitable and where we didn't see any possibility to turn it around. The great development of the existing store portfolio is based on many things. First of all, you need to keep in mind that especially compared to some of our competitors, or basically most of our competitors, the store portfolio is quite still young. If a store portfolio is quite still young, you will see a wide range of performance differences between the different stores. Why is that the case? Number one is the stability of the store, meaning that do we have enough people to run the store?
Are we able to keep these people within our stores? Do they live up to our standards? There is a very limited number of opticians out there, and there's a huge competition, and we really achieve to win opticians and to win good store personnel. Nevertheless, we are not where we are supposed to be and where we want to be. One of our main initiatives within the store portfolio restructuring or improvement process is to hire more good people and to keep them. We run a lot of data when it comes to our store portfolio, and what we saw is that location and traffic are not as important as the quality of the store personnel. Not to say that you can have, let's say, a second-class location and have top store personnel, and they will turn the store around and achieve great results.
On the other hand, you can have great locations but have a team in training, and they will not achieve. This is why we're pushing very hard for our personal development within the stores, and this will be a main driver. Number two is, of course, our subscription model. The subscription model is pushing a lot of new customers into our stores, and this is very important to us, not only because we have new customers, but the customers have a different purchasing power and purchasing behavior. The share of prescription glasses is much higher compared to our normal purchases. Even if you look at the multifocal share, it's higher compared to the regular business. This is a big push to our store portfolio. Number three, Eye Health Check, there again. We see an increasing traffic coming from Eye Health Check. Why is Eye Health Check so important?
First of all, it's giving a lot of new value to our customer, which they did not see from our side before. Number two is that we still see a high conversion of Eye Health Check customers into PG, probably even into our subscription model, which is another different push. Bottom line, we are on it. We need a little more time, but we don't see why we should lose pace when it comes to returning more stores profitable.
The second question was related to SpexFocus and how far we are advanced in the execution of our program at SpexFocus. Let me give you a quick overview. SpexFocus, at the end, was a program where we had different components, such as the store closure, such as headcount reduction in the overheads, for example, supply chain optimization, variable cost improvement, and other things.
If I look at it from today's perspective, the closure of the stores, the international stores is done. We closed down eight stores. On top, with the review of our stores in Germany, we closed down two more stores in Germany. From that perspective, this is done. We overall released approximately 260 headcount within a year. From that perspective, also the headcount reduction related to those measures that we have undertaken is done already. With respect to the supply chain, the international warehouse is closed. This is also done, and also the measures under variable cost improvements, such as purchasing conditions, such as improvements in the customer service, and other things are done as well. With respect to store performance, and this is what Tobias pointed out, we are maybe now at 50%, and there's still improvement potential. However, are we ready with SpexFocus?
No, there are more measures to come. Specifically, we are aiming for more efficiencies, specifically in the overheads, but also in our supply chain. From that perspective, there are more measures to come. A second or third comment on the impact. Basically, you have seen that in the first half of the year, we had EUR 2 million of severance payments. Basically, the positive impact will show up now in the second half of the year. Not everything that we have done is visible in the first half of the year. Partially, you will see those items then in the P&L in the second half of the year. Please, Tobias, let me add one more information.
Based on these efforts, which we made in our store portfolio and the playbook for our store portfolio, which we created, we see a great opportunity for us to open new stores in the near future. Not in the same amount we did in the past, we're going to be much more cautious. As of today, we feel much more confident to have more stores because we do have a playbook in place, which will push these new stores to profitability very quickly.
Thank you.
Your next question comes from the line of Cédric Rossi of Stifel. Your line is now open.
Yes, good morning, everyone. Thank you for taking my questions. I have two, please. The first one is regarding the Switch offering. It is very good to hear the good progress on that side. Since you are launching the online campaign soon, how will you deal from a margin perspective to prevent from any dilutive impact? I assume that probably customers will be still more price conscious. They will probably focus also on contact lenses instead of prescription. How will you deal with the mix in terms of a mixed strategy and also from a margin perspective? My second question is regarding marketing. Since probably those campaigns will also imply some additional costs, how can we see the trajectory for the marketing expenses for the second half of the year? Thank you.
All right. Thank you, Cédric. Number one, Switch online versus Switch offline. First of all, contact lenses are not part of our subscription program. It's just prescription glasses and sunglasses. That's number one. We will not see any dilution from contact lenses. Just to give you some more information and some more background to subscription. Offline, as I already said, it works out great. 45% is the multifocal share versus roughly 35% for non-Switch users. There we see the shift we would want to see even quicker by selling more multifocal. Customer profile, I already told you, high concentration of users in the age of 45- 55. That's exactly the target group we're looking for, and we're pushing hard to get even deeper into product mix.
Online, offline, especially, of course, we will see a little lower AOV within the online subscription model compared to offline subscription because we, of course, don't see 45% multifocal share when it comes to our online subscription program because it remains the same that in order to sell multifocal, we will have to have the people in stores. Nevertheless, the AOV will be much higher. As of today, AOV for Switch online is EUR 450 compared to EUR 550 in offline. AOV within the regular online business is EUR 200. It's more than double AOV speaking about Switch online. Last but not least, we didn't really push for Switch online yet. The marketing campaign will start in October because we have another marketing campaign regarding premium branded lenses in September. We didn't want to compete with these two campaigns. That's why we pushed Switch online to October.
We're going to see a bigger push in Q4 when it comes to Switch online. Regarding your question in marketing, I'll hand over to Stephan. Yeah. Marketing, as I said in the presentation, we spent approximately EUR 700,000 for Switch in the second quarter. We calculate another EUR 800,000 in Q3 and in Q4. I think it's fair to say that the marketing expenses in the second half of the year will be comparable to the third half.
Okay, we're ready here. Thank you.
Your next question comes from the line of Ralf Marinoni of Quirin Privatbank . Your line is now open.
Okay, thank you. Good morning, everybody. My question is about your Mister Spex Switch initiative. Could you get any comments from the industry and your suppliers? What do they say?
Sorry, but what do they say regarding what exactly?
About your new Mister Spex Switch model.
Okay.
If I may.
It's very new and innovative in the industry. Maybe you have any comments also from competitors or suppliers or whatever. That's what's interesting to me. To be blunt, we don't have any feedback from our supplier side. I think that, of course, our supplier side likes the program, especially when it comes to lenses, because we're pushing for the higher value lenses. The suppliers with the higher value lenses, they, of course, benefit from this push. Of course, the higher value frames as well, since, as we just discussed, the AOV goes up. This is mainly driven by the lenses, but also by the frames. We see a differentiation regarding the product category and portfolio to a higher value frame. Is that exactly what we would want to see? We are not sure, right?
Like most of our competitors, we would really want to push our private brands and private label brands because this is where we have the highest margins. This is where we are looking at in the next weeks to much more push our own brands when it comes to frames.
Okay, understood. Thank you.
I'd now like to hand the call back to Tobias for final remarks.
All right. Thanks for joining today. Thanks for the questions. We will be on the road in September. Hope to see you there. As always, if you have any questions, please reach out to Irina. Once again, thanks for your time.
Thank you.
Thank you. Have a nice day.
Have a nice day.
Thank you for attending today's call. You may now disconnect. Goodbye.