Thank you. Hi, everybody. Welcome to the Q3 2022 results presentation for the Fashionette AG. Thanks for sticking around. My name is Georg Hesse. I'm here since July. For those that haven't noticed, I'm also here with our head of finance, Oli, with Armin from Investor Relations. We can also take questions for Thomas, obviously, our COO. We have enough time for questions after that. Let's dive into the highlights. Q3 generally saw an increase in net revenue growth, and we'll talk about that. We grew by 22% despite the strong macroeconomic headwinds. We saw solid new customer growth of 27%. We were able to decrease the marketing cost per order and the customer acquisition cost.
We're super happy to have a positive operating cash flow in that quarter, leading to a comfortable liquidity position of almost EUR 10 million by the end of Q3 2022. We did still adjust our guidance. Net revenue expectation is now EUR 165 million-EUR 175 million, between 7%-13% growth. We now plan for an Adjusted EBITDA between EUR 1 million and EUR 4 million. We talk about that in the regions. Those are the highlights. Let me first talk about some quantitative capability topics. One of the capabilities that we've acquired when we acquired Brandfield last year is the very strong expertise on creating own premium brands.
We're very happy that in this Q3 now, the Leatherware collection of that premium brand, of one of the most important premium brands that we have, is now available also on Fashionette. Fashionette obviously being a traditionally handbags brand in the first place, very strong in handbags. Having Leatherware there now obviously is a great potential, and that does show some of the synergies we have and some of why this is a strategic good acquisition. We also have a shoe collection that is now live in Q4 on Fashionette. Early results are already super promising. Why is that good and why is it strategically important?
We are obviously complementing our existing premium handbag portfolio on Fashionette, where we're already strong, and we can offer a premium quality at very attractive prices. This is really very good leather stuff. It's not cheap stuff. It's not, you know, to replace a lower end, but it's really an important addition to the overall premium portfolio and has attractive gross margins. You'll hear me talk more about gross margins throughout this presentation. This is one of the drivers that helps us turn around the gross margin. That's one of the things. The other thing I'm super proud of is what our communications department did, which is, you know, create the new brand campaign, We Are Fashionette. This is more than just a brand campaign.
This is really exemplifying us getting more clarity about who we really are, what our role is, what our niche is, and what our position is versus competition in this segment. I've been talking about it. We are not your average, you know, premium and luxury platform. We are on the side of the customer. We have the best customers in the world, hardworking women that don't need us to take an elitist stance and pretend we're an ivory tower of style. They know what they want, and they know how they want to complement their style with our products. This is how we create our website, you know, how we talk to our customers. This is also how we talk about us now publicly. We are an approachable premium luxury fashion accessories retailer.
We are a community that strives for individuality, for inspiration, for inclusion. We are not an ivory tower of style that is merely a platform for different brand styles. We are more than that. We are close to our customers, and the new campaign really exemplifies that. I'm very proud of that. That's actually forcing function also for us internally to continue on that path to have this very special role within premium luxury that we have. You see that throughout Q4 and in Q1, obviously around Cyber Week, Christmas sale events. You'll see it there. It's not just branding. We also have performance spots around this all the time. Again, very proud of making this step.
This is just moving us closer and closer to the clarity of the company we wanna build and who we want to become. Now into the numbers, right? Financial update. First, revenue growth, 22%, very solid. We did expect revenue growth to accelerate after a soft half year one, obviously driven by the crisis, by the shock event in February. We saw some softness there, especially in the Netherlands. We now see all those regions recover. We saw double-digit growth everywhere. Still, Benelux lagging somewhat behind slightly. But you know, still double-digit growth there.
In half year two, in half year one results, we mentioned that the then soft growth of Benelux, which was actually negative in half year one, for us was a good litmus test to understand the macroeconomic impact on customer demographics that are slightly different than what traditionally was Fashionette. Because our Benelux customers, though, that cohort is obviously different because it mainly comes from a brand new acquisition with a slightly lower average selling price that we have there. This is actually a good indicator of what it does to more average customer demographics, when you have these macroeconomic headwinds, when you have inflation coming at us. We still see that. Benelux is still somewhat lagging behind the rest.
In general, very solid growth, also in DACH. Obviously the others coming from a very small base of 11%, growing 50%. That's nice. We see order value mostly flat, even slightly up. Number of orders growing even more strongly than we grow the net revenue. Why is that? As a reminder, return rates are back to the pre-COVID levels, and so now we're comping obviously a year with lower return rates. We have to do more orders now to do the same net revenue. That's what we see throughout all the financials have an impact, obviously. On the new customer growth and customer growth, very solid double-digit growth through both entities, Fashionette and Brandfield, both.
Brandfield actually contributing now 70% to new customer growth, growing strongly but also Fashionette growing in the double digits. Again, active customers above 1 million for the last 12 months. Yeah, that's an asset that we can do more with than just sell handbags to them. Marketing cost per order, I think same picture that we've seen. We managed to decrease that. Now also, customer acquisition cost down somewhat on Brandfield's side. I think that's very positive. However, only small changes, obviously. Let's go through the overview of financial KPIs. The return rate there stands out. If you look at return rates year-over-year in Q3, you see that's a substantial increase.
We see that translate into most of the other KPIs as an impact. As previously mentioned, we don't think that's a doom loop. We think it's just the new normal. It's not gonna be more dramatically, you know, becoming worse even next year. We've just come back to pre-COVID levels and that's where we are now. The only impact then is just mix changes between categories, right? If the shoes share would be growing dramatically, and it's not growing dramatically, but then you would see a further increase. It's a one-off impact obviously versus last year. Net revenue growth, if you look at the nine months, it's about 10% now.
That's also about how much we guide for the whole year now, and net revenue growth in the quarter, as we mentioned, it's 22%. Now the gross margin. Gross margin down 140 basis points. This is obviously driven by, you know, massive competitive pressure on not only online, but also offline, with us seeing everybody coming in very heavy into this year with a lot of inventory and many people being very nervous now with a lagging consumer demand to get rid of that inventory. We just see that impact. I mentioned it in Q2 results presentation, I don't expect that to change for Q4. Unfortunately, I was not wrong there.
Q4 is seeing massive discounting, 50% off activities by major competitors. You know, we can't talk for them, but obviously there seems to be a lot of inventory out there in the market that drives some of those declines. If you have a 140 basis points decrease in gross margin year-over-year, then that translates pretty much down to the Adjusted EBITDA margin where we are 100 basis points down year-over-year. You see that there. On the other metrics, distribution costs, you know, could remain level in spite of the more orders for net revenue, which is a good result.
Marketing cost ratio at the cost ratio, again, more orders need to be, you know, brought in with our marketing to achieve the same net revenue. That's why even by the increase on the per order level, because of the year-over-year development in return rates, you see that this had the effect of slightly increasing marketing cost ratio. We've been disciplined on the G&A, so that's good and that takes away some of those increases, and some of the other 140 basis points missing gross margin. Not all of that translates down to the EBITDA, but 100 basis points do. That's why we wanna change something on the gross margin going forward. On the cash, I think, you know, just happy about the development there.
For us, we could, you know, obviously free up some of the inventory that we had, translating into cash. Q3 is an inventory building quarter, normally. We did, in the Q2 results presentation, warn everybody that maybe the positive operating cash flow might not be retained, in Q3. It in fact was retained, so we're also positive there, which is great. That's where you wanna be. You wanna be flexible, and you wanna have the liquidity when there's times of uncertainty ahead. That's good. We're happy about that. What's it mean for the rest of the year? You know, November eighth, we did adjust our guidance. We saw that we were growing nicely in Q3. We expected that though, too.
We've seen that the early beginnings of Q4 have actually been favorable in terms of trend. Growth has softened there. If you do the math, we would have needed to grow more than 25% for the rest of the year and to retain within the old guidance based on Q3 results and then Q1 and then October results and the early days of November did not warrant that. That's why we have to reduce the guidance. We also reduce guidance on the EBITDA that comes mostly with the net revenue decrease.
There is also a change on the gross margin, but obviously the net revenue decrease translates into a lower EBITDA outlook. What we do assume is that just customer demand doesn't pick up noticeably in the main weeks. If we are wrong there, right, if we see an amazing Cyber Week and Black Week and a great December, that might change. Just we have to be prudent and just assume that the data that we see points us to the right way and that's why we have the new guidance there. How we organize ourselves around this reality, around the softening demand in Q4 and the current pressures is something that will make us stronger as a company.
We're set up to deliver sustainable profitable growth for the long run. This has to do with how resilient we are in these times of uncertainty. How we set ourselves up is to react to a time of potential headwinds, and the answer to that is resilience. The answer to uncertainty is flexibility. These are the things we're doing. For us, resilience means three things. It's to know what's going on, to have tactical awareness, to retain ambitions, so not to plan for failure, not to move backwards because it has a lot of consequences that you don't want to. You need to retain ambitions and at the same time drive flexibility and having costs down.
That's the right behavior in our opinion, in a situation like this where there is potential, but there's also headwinds and there's a lot of uncertainty. On tactical awareness, we have a great base of data, right? That's even in our mission statement, right? We wanna be the number one data-driven platform for premium and luxury fashion accessories in Europe. It's very important to us that we have a democratization of the data so that all our teams can make good decisions along the way when they have to make tactical decisions.
The proliferation of business intelligence tools, the rollout of all those capabilities also to Brandfield, our acquisition last year, so that we make similar decisions there and have a similar quality of decision-making there is very important to us. How we do cash planning, our scenario management, increasing that frequency is important in a time like this, and that's what we've done, and that makes us a better company anyway, right? It's good things. It's not one-offs, that sunk costs, but it's some things that make us a better company anyway. That's the right thing to do. It's also the right thing to do to retain ambition. We still wanted double-digit growth for the full year this year, and profitably so, right?
That's what we aim for. That's also what we guide for. We're very ambitious with our in-season inventory management for this Q4 especially, driving down returns and retaining cash. That makes us a better company no matter what, no matter if those headwinds really come to pass or if they don't. It's the right thing to do. We're setting ourselves up for gross margin turnaround in 2023. I'm very unhappy with the long-term development over those years of gross margins. I think we've grown nicely, but that's a trend we are turning around, and we will turn around in 2023. That's the right thing to do anyway, you know, no matter if headwinds and uncertainty or are not, and those decisions are the right decisions.
Supporting that are our cost down and flexibility up activities. In many cases we'll be saying no for now to experiments, to expansion activities, to many things that we love to do, we think are the right thing. We're not saying no to them generally, but no for now is the right focus in times of uncertainty because it buys you flexibility depending on the actions coming in and depending on what data coming in. Headcount, we're very restrictive on depending on 2023 actuals. Let's see how this turns out, and how much we really want and can afford, when we have more knowledge about how a potential economic crisis is coming or not and how the headwinds really are coming or not.
We already made relevant cuts on the non-performance marketing spend. You saw that I'm very proud of our brand campaign and our new positioning. You know, we all made very painful cuts there already in terms of how much we display that and where we show it. We have to be very smart, and we are very smart on everything that's non-performance related. Also, as we retain our ambition, we don't go on the performance marketing spend. We still wanna grow and have efficient spend. We are hibernating basically most category expansion activities until we have more clarity about 2023. There's a lot of stuff we can do. There's a lot of things that would be nice to have. Most of the stuff is not essential.
This helps us focus. It's painful, but it's the right thing to do. It makes us a better company, a leaner company anyway, to make very focused, very conscious decisions based on data coming in on how the external situation unfolds. On a buying strategy, we are also very conservative there. We are very margin conscious, very selective and flexible in how we buy, because that's a core driver of the gross margin we end up having. That's already what the teams are executing. All those decisions will be setting us up on the right path for gross margin turnaround in 2023. They are the right things to do no matter what happens, right?
Running a tight ship that's ready for any storm makes you also run a fast ship when there's no storm. That's what we're doing and that's how we go into really Q4 and into 2023. Key takeaways I'd love you to take away from that is to, you know, Q3, we expect growth, profit, Adjusted EBITDA for the full year. That's how we guide. We saw, you know, solid growth in Q3 to support that. We have positive operating cash flows and liquidity in Q3, which is really good. We expect to obviously increase that in Q4.
We talked about some strategic initiatives for the long-term growth, which have been established in Q3, the own premium range. You can just talk about that more probably in the future, the new positioning. We said we recognize the possibility of headwinds coming through the rest of this year, on the customer demand, also in the gross margin, and potentially into 2023. Therefore we optimize for resilience, retain flexibility by simplifying, by adjusting cost and risk, by focusing especially marketing personnel in inventory. Those activities would be the right things to do anyway. They make us a better company, they keep us disciplined and they help us with the gross margin turnaround that we have in 2023.
You know, we have, you know, Armin, obviously, our new Director of Investor Relations, that you're able to reach or contact when you don't have a chance to pose the questions here or meet us in one of the events. Feel free to contact Armin going forward. From then on, I'll say thank you for listening and let's open up for Q&A.
Ladies, and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Christian Salis from Hauck Aufhäuser Lampe Privatbank AG. Please go ahead.
Hey, good morning, everyone. I hope you can hear me all right. I've got three questions please. The first on the net debt. At the end of Q3, net debt now stands at around EUR 17 million. If I look at Bloomberg, the consensus expects some EUR 17 million-EUR 18 million in the full year. However, I mean, in Q4, cash flow should be quite strong, right? Therefore, the consensus number looks too high, in my opinion. Could you maybe confirm that? Secondly, on the integration of Brandfield, could you just provide an update, maybe how much of the assortment is already integrated and what are the next steps here in the coming quarters?
Then finally, could you please provide a split regarding the profitability in Q3 between Fashionette and Brandfield standalone? What's the Adjusted EBITDA margin for both subsidiaries, basically, standalone in Q3? Thank you.
Yeah, thanks. It appears we have sort of some connection issues and the quality is not really good. I'm gonna repeat the question and you can go back if you didn't understand them correctly. I understand that you had a question on our new guidance versus consensus, and that the consensus is different than the new guidance. That's how I understand it. As you know.
Sorry. It was just about net, the net debt figure, not about the guidance. I don't think you have any guidance on net debt. It wasn't about the sales or Adjusted EBITDA guidance. It's about the net debt figure and the net debt expectation on Bloomberg. Maybe could you just talk about the cash generation in Q4 and whether you expect net debt to improve in the full year compared to the EUR 17 million we are seeing now in Q3?
The question is how much does net debt go down, basically, if I understand that. We expect that to go down by EUR 4 million. If that answers the question. The question was on how much of Brandfield integration has already happened and how the progress there is. We have made a major step, which is the organizational linking of the companies so that basically we have global organizations now that have global reach and responsibility, buying teams that buy for both, you know, both entities. It's super important also the other way around. We not only have teams sitting in Germany that were Fashionette teams now taking global responsibility, but also the other way around.
We just make that based on where the best people sit. I think that's a very powerful next step on the integration. Process-wise, I mentioned two things. I mentioned selection. Our own brand selection is now available globally and also on the other platforms, which is great. Business intelligence, which is a core driver of what we think is our ongoing competitive advantage. It's how we make decisions. That is rolled out now, with all the sandboxing and all the tools also to Brandfield. Some of those things are happening. On the other steps, a lot more has to be done to be honest.
It's not that easy to get all the benefits in. If you think about ERP systems, you know, split image, all these things, there's a lot more work to do. Thanks for the question. There's progress, but we're not done yet. I think there's a question on profitability of Fashionette versus Brandfield, which we don't break out separately. But those are both profitable entities. I think that's important. This is, you know, Brandfield was profitable when we bought it, and it is a profitable company. Both are contributing. It's not that the one is the growth driver and the other is the cash cow. It's not like that. Both are profitable, but we don't break out the individuals.
Okay, thank you so much. Maybe just a confirmation on the first question on net debt again. Could you confirm that the net debt should decrease in Q4 from EUR 17 million?
Yes, yes. Thank you. Sorry for being slow on that.
Thank you so much. Yeah.
No problem.
That's very helpful.
Yeah. Okay, thanks.
As a reminder, if you'd like to ask a question, please press star followed by one on your touch tone telephone. There are no further questions at this time, and I would like to hand back to Georg Hesse for closing comments. Please go ahead.
Thank you, everybody. I'm hearing we have some issues with the sound, so for that, and thanks for sticking around, and listening extra carefully this time. Thanks for that. Yeah, thanks for your continued interest in the company. You know, we see some headwinds in the macroeconomic environment. Everybody sees them, as you see. I think we're set up very well to benefit from that in that respect, that we've created a company that will make us successful no matter what the external environment will look like. We stay tuned for a gross margin turnaround in 2023. Have a great Q4, everybody.