Ladies and gentlemen, welcome to Mavi first quarter 2020 webcast conference call and webcast. I will now hand you over to your host, Mr. Cüneyt Yavuz, CEO. Sir, please go ahead.
Thank you. Hello, everyone. Welcome to our conference call regarding the financial results for the first quarter of 2020. The COVID-19 pandemic that began in early 2020 and impacted the whole world has created new challenges for all of us. From day one, we started managing the social and financial impact of this health crisis head-on. We will be talking about the impact of the pandemic on our business and our internal responses throughout this presentation. Should you have any further questions, I will be happy to answer them at the end of our call. Before going into the key highlights for the period, I would like to start off by summarizing our approach to the pandemic. I'm on slide two right now. Protecting the health and well-being of our employees, customers, and all business partners while also maintaining the company's financial resiliency has been our first and foremost priority.
We have adopted all measures recommended by the local and global health authorities in all of our markets immediately. In this context, we closed all retail and franchise stores temporarily and applied full-time work from home schedule in the head offices. Our employee concerns were very important to us, and we immediately announced that their jobs were secure, and all salaries would be paid in full. I would like to give you a brief update on the current status operationally. In Turkey, all retail and franchise stores closed on March 19th, 2020. Gradual reopening started on May 12th, 2020, and all stores have opened as of June 1st, 2020. Online operations in Turkey were also suspended on March 30th to increase health precautionary measures in the warehouse and resumed operations on April 17th.
Internationally, all retail franchise stores also closed on March 19th, 2020, and stores in Germany and Canada reopened in May. Stores in Russia started reopening on June 1st with four stores in Moscow. We expect all Russia stores to be open as of June 15th, 2020. mavi.com, marketplace, and wholesale e-com channels in the international markets remained open throughout the first quarter. In slide four, we highlighted our new health and safety measures as we resumed operations. As pointed out here in detail, we are using a new age nanotechnology, antimicrobial system for disinfection in order to achieve the highest hygiene standards in our stores, warehouses, and headquarters. Reopenings in each market are in line with local restrictions and rules on social distancing. Hence, capacities of the stores have been remodeled in order to keep a two-meter physical distance between customers and employees.
We are serving our customers with health protective materials such as masks, gloves, face shields, and are providing them with necessary equipment and hand sanitizers upon entering our stores. There are many more and detailed new procedures in place. Here I would like to thank all our employees in the field for their devoted contribution to this process of creating a safe shopping experience for our customers. I would like to summarize our initial responses on slide five. I believe that Mavi's strong risk management and low indebtedness policy as well as flexible inventory planning and a portfolio of in most part seasonless product with jeans constituting roughly 50% of our business enables us to deal with and overcome the challenges in these difficult times. When the virus outbreak was called out a pandemic by the World Health Organization mid-March, we immediately started taking necessary business actions.
Initial and urgent actions were categorized under product inventory management, OpEx management, and cash liquidity management. We have made adjustments to product purchasing plans in full collaboration with suppliers. Our jeans business has been very supportive, both in the sense that the product is seasonless and also because we have a more dynamic and responsible supply chain. As more than 70% of our current inventory is less seasonal, easily convertible into fall/winter season, we have a longer shelf life to liquidate current fresh inventory. We have also outlined detailed category plans following the reopenings targeting efficient sell-through and inventory management, enabling us to defend our gross margins. In terms of OpEx, as stated earlier, all employees continue to receive full wage. We made use of state supports in all markets where available.
The rents have been negotiated with landlords for zero payment during the closed period, and we are negotiating new reduced rates as openings begin. Needless to say, all other non-compulsory OpEx has been cut, and we will continue to closely manage our expenses. One of our most important priorities in this period was to manage liquidity. We have immediately deferred and scaled back the investments, deferred immediate payments in agreement with business partners, expanded credit facilities extensively to secure liquidity. As you know, we have also canceled dividend payments from 2019 profits. Having reviewed the COVID-19 impacts and Mavi responses, now let's move on to slide six with our key highlights. As of this quarter, I will be sharing the results, including IFRS 16 impact, as supported unless otherwise stated on the charts.
In the first quarter of 2020, our consolidated revenue decreased by 40% to TRY 387 million due to store closures. Nominal EBITDA for the period is TRY 20 million, resulting in 5.2% EBITDA margin. We have a net income of minus TRY 52 million. Store rollout plan has been temporarily paused due to COVID-19 conditions. The total number of mono brand stores globally, including franchises, stands at 432. Turkey online sales increased by 49% in quarter one for the period it was open. Here, I would like to make a note. As you know, we normally share Turkey retail like-for-like figures in our earning results. With all stores being closed for almost half of the quarter, by definition, there is no like-for-like set for this quarter. We will go back to reporting our like-for-like KPIs as soon as there is a meaningful set. Moving on to slide seven.
Consolidated global revenue declined by 40% and resulted in TRY 387 million. Due to store closures, revenue channel split was significantly changed in quarter one 2020, with 51% retail, 39% wholesale, and 10% e-com. We benefited from our solid e-commerce platforms. This quarter, online business has been the remaining growth channel, with 41% growth globally despite a three-week suspension. Sales in Turkey were down 42%, with 48% decline in retail and 35% decline in wholesale. This does not imply a difference in performance. It is due to the shipment calendar, meaning that most of the wholesale shipments were done in the first half of the quarter. Our e-commerce business in Turkey grew by 49% in quarter one 2020. International sales were down 34% in TRY terms. Moving on to slide eight, let's focus on Turkey retail business.
Before the COVID-19 outbreak, we had opened one new store and closed three stores. We had more store openings planned for the quarter, some of which had already undergone all preparation work but were deferred. No stores went through expansion in this quarter. As of end January, we have 312 own operated stores totaling 136,000 square meters of selling space in Turkey, with an average store size of 499 square meters. Moving on to slide nine to review category-based development. I know you will view these figures knowing that the stores were closed for almost half of the quarter. Having said that, our denim, knits, and T-shirt categories were all down around 50%, jackets 30%, and accessories 43% in the reported period. On slide 10, let's review our online sales performance, as this was the only channel that could contribute positively to sales growth in this quarter.
Recall that in addition to our direct-to-consumer sales that are reported under e-commerce channel, including mavi.com and marketplace, our customers can also buy Mavi products through third-party digital platforms to which we wholesale. Including the wholesale e-com, our total online sales reached TRY 58 million globally and constituted 15% of total revenue in Q1 2020. As you know, since 2019, we are moving our business model away from wholesale e-commerce in favor of marketplace model. Hence, you see switches in sales between these channels. Overall, as one would expect, our online sales have grown in Q1 2020, and the share of online increased to 7.1% in Turkey and to 44.3% in international sales. Let's move on to review our margin performance on slide 11. As you know, we were targeting significant improvements in margins this year before the COVID-19 outbreak.
In Q1 2020, we could only operate in February, which is generally a bridge month in which previous season products are sold with markdowns, and then half of March, where the new season product sales started picking up. Given an operationally weak period in hand, our gross margin ended at 45.7%, which is almost in line with the same quarter last year, eliminating the impact of high imputed interest rates. Although we took immediate and effective actions on OpEx management together with the pandemic outbreak. Considering the compulsory OpEx items and full month cost of impact for the month of March, has resulted in a significant increase in OpEx to sales ratio. As a result, our EBITDA realized at TRY 20 million with 5.2% EBITDA margin in Q1 2020, down from 20.4% last year same quarter.
As you know, we have expanded our credit facilities extensively after March in order to secure liquidity. Despite the higher net debt, our net interest-based financial expenses were lower this period. On the other hand, rent discounts received were reported as financial income within the context of IFRS 16 adjustments. Consequently, we have a net loss of TRY 52 million for the quarter. I would like to move on to slide 12 to take you through our working capital progress. To reiterate, we had started spring-summer 2020 season and had received the initial product drops to stores when we decided to close all stores on March 18th. We continued to receive most of the remaining season products that were manufactured, hence our inventory levels have increased. The good news is that the entire inventory consists of seasonal spring-summer products sellable through end of September, with denim products being seasonless.
Consequently, our working capital as percentage of revenue increased from 5% at the end of January to 8.8% as at the end of April 2020. Considering that the pandemic conditions will continue with gradually decreasing impact, our working capital ratios may continue to be under pressure for the rest of the year. In the first quarter of 2020, our operational cash outflow in total was TRY 159.3 million. Let's move on to the next slide, which is slide 13. Although we have opened only one store in Q1 2020, we had undertaken some CapEx in preparation for the openings planned for the rest of Q1 and Q2. On top, we have the ERP transformation investments that are continuing as we speak.
In this period, we have spent TRY 31.9 million of CapEx, resulting with a CapEx to sales ratio of 8.2%, which should be normalizing as the revenue stream resumes. In order to be prudent in terms of liquidity management, we used an increased amount of bank credit since mid-March, most of which are still held as cash. Our net debt level increased to TRY 209 million as of end of April 2020. This implies a leverage multiple of 0.7 times of EBITDA. Looking into the currency composition of our debt, 18% of total consolidated debt belongs to our subsidiaries, who all borrow in their respective local currencies. As of end of April, only 6% of debt is in foreign currency and is totally covered with foreign currency assets and receivables from subsidiaries. Therefore, we still don't carry any open FX positions on our balance sheet as of today.
Moving on to slide 14, I would like to provide some insight into the second quarter. As you recall, we have withdrawn our initial guidance in March. We choose not to provide a new guidance at this point with all the uncertainty ahead of us. Instead, we find it valuable to share with you what we are seeing in the market as of today. As you know, all operations are up and running as of June 1st, with service hours and capacity limitations. In Turkey, selected stores operated for only nine days in May, which we believe does not form a basis for an outlook. We want to share with you the performance of the same stores in the first week of June.
We are observing that while traffic is down around 60%, conversion and units per transaction are up around 50% and 30% respectively, resulting in same-store sales of -20% compared to last year. Our core product categories, denim and T-shirts, are performing strong. For the time being, street locations, which constitute around 20% of our sales, are performing slightly better than shopping mall locations. I would also like to provide an update for e-commerce operations in Turkey. In the period from May 1st to June 7th, total online orders are up by 5.5 times, with mavi.com being up by 3.5 times, and marketplace orders up by 10.5 times. Moving on to slide 15, we would also like to provide as much insight as possible regarding how business is being managed. In terms of product management, our category planning teams are very busy targeting effective sell-through rates to defend gross margins.
We are managing in-season orders even more dynamically with shorter lead times and effective open-to-buy planning. In terms of OpEx management, we continue to strive for additional cost savings. Wage subsidies have ended along with store openings. We continue our rent negotiations targeting to preserve rent ratios. We have six new store openings and three expansions that are scheduled for quarter two 2020. Most of their CapEx have already been incurred in quarter one. Our IT investments and ERP transformation project continues uninterrupted. For improved measures, we are budgeting an additional OpEx of TRY 7 million and additional CapEx of TRY 5 million for this budget period. Mavi's capability to manage change rapidly and effectively has served as the basis for the company's sustainable success for almost 30 years.
I am confident that with our strong leadership and a team of more than 4,000 dedicated employees, we will be among the top companies that best manage throughout these difficult times. Once again, I would like to thank all our employees, customers, business partners, and shareholders for their continued support in helping us to continue to drive our business forward. With this final note, I am more than happy to take any questions you might have. Thank you very much.
Thank you. Ladies and gentlemen, we will now start our question and answer session. If you wish to ask a question, please press zero one on your telephone keypad. To participate in our written Q&A, please type your question into the webcast. Thank you for holding until we have our first question. As a reminder, ladies and gentlemen, if you wish to ask a question, please press the one on your telephone keypad. Our first question comes from Cemal Demirtaş at InvestAZ.
Thank you for the presentation and congratulations for your actions during this period. Especially about your employees, you're very much respectful. I just want to congratulate you on that point specifically. My question is about whether we are expecting any extension of this short time working support or support from the government after June, or even in June. Do you see any changes in those things? You mentioned that you negotiated with your landlords. How successful you are in setting the agreement with them as a portion of your total, the contracts? Just give an indication about that. Thank you.
Thank you. Just to build on what you said, I am also feeling very proud the way we are treating our employees. The good news is, as they get back to work, I can see all the energy and motivation and the quality of service they're able to deliver to our valued customers who come and shop with us every day. That energy is also transcending. As I just shared, since the opening, I'm happy to see that we are delivering better than expected sales under the given conditions, and there will be hopefully a quick recovery to our total turnover. As Mavi, as a brand and a trusted brand, that I am quite confident that we will continue to win in the Turkish market as well as in all the other markets that we continue to serve.
From the extension of the short-term working perspective, we did get the support, especially it was significantly important for us for the retail staff who was out in the field. As a total sum, it is not a major big number. It's around TRY 5.6 million for quarter one, the total sum of support that we got. As we open the stores, we have clearly walked away from that support. We are not now benefiting from the short-term employment contract. At this point, moving on for the rest of the year from our budget perspective, we are not counting on any uncertainty, counting on any further support from that front. Should there be a very unlikely shutdown or a slowdown, maybe then we may come in and ask for support.
Otherwise, as we have opened all the stores and we have brought all the team back to sales, I'm quite confident that as long as we keep the sales going, this support will not be required from us moving forward. As for the landlords, key parameter, ever since the process that we were going public and through the days since we became public, my comment on rent was that this is an area where Mavi will continue to win and deliver. As an OpEx, it's an area we will be able to defend our position moving forward. I'm happy to report that during the period, we were able to not pay rents. I'm also grateful to all our landlords who appreciate Mavi business and our good business partnership, and we have not paid rent, and this has come through well.
Now, since the opening, we are in the process of making sure that there is a reasonable ramp up with a discount as business normalize. For the rest of the year, if you want to model as Mavi, rent ratios as a percentage of sales should remain relatively similar to last year's performance. That's what we are targeting. I'm also, again, since the opening, the way the business is going and also the contracts are being renegotiated both with street locations and shopping malls, we are in a very relatively good business terms. I am also through this, since you've given me the chance, but also we extend my thanks to our business partners in that sense for making this happen. Therefore, to sum up, on the ramp portion, from a landlord relationship portion, I remain very confident and very positive. Thank you.
Thank you. Regarding the guidance, when do you think you will have some, at least the picture that will lead you to give some guidance? Maybe after June or should we expect until the announcement of the following quarter's result? Thank you.
At this point in time, we will do our utmost communications through our IR to give everybody a good sense of where the business is heading so that you can also feel how we're running and continue to well manage our business. If you ask me today, I don't think there will be an official guidance coming from us anytime sooner than when I announce the quarter two results. There's quite a bit of uncertainty ahead of us. Only by then will we be in a position to talk about what will happen, because there's still a lot of unknowns ahead of us.
In the meantime, we will, as a team, do our best, as I've just done, to give you snapshots of cost, OpEx, CapEx, revenue, customer tendency, e-com transformation, to give you a feel that we continue to build our business and that we're in good shape. Thank you.
Thank you.
Our next question comes from Mehmet. Attend guest, please go ahead.
Cüneyt Bey, hi. This is Mehmet. Your online sales as a percentage of total in Turkey is quite low, 7%, compared to international percentage, which is 44%. Can you explain the difference? Can you give us a vision of where the retail business will be going from here, given what you have gone through in the last three, four months. Have you changed your business strategy or have you started thinking about changing your strategy in terms of channel sales model and overall business? Thank you.
Thank you, Mehmet. Overall, Turkey ratio is 7% of total business and growing strongly, as you can see since May 1st, because we did close the e-com for a couple of weeks, to get the warehouses ready and have all the health measures taken in the warehouses. Ever since we opened them, as you can imagine and as I've shared, our total e-com business is booming in Turkey given the current conditions and the lockdowns of the stores. On a very micro level, and of course vis-à-vis international, just to build on that, as we are a much bigger retail player in Turkey with more than 370 stores across Turkey. Naturally vis-à-vis the international markets, whether it's U.S., Canada, or the European markets where we typically wholesale, the split of business is quite different.
There will of course be dynamics in how the business evolves across the next years. From a strategy perspective, for almost now more than 18 months, in almost every quarterly call I've been making a call out and sharing with you that we've been investing heavily behind our e-com platforms, CRM setups, that we've been investing heavily behind our warehousing systems, delivery systems, not only in Turkey, but also in U.S., Canada, in Russia, in Germany, along with Turkey. On top of all the investment that we've been going through, we've been investing heavily on our digital and IT infrastructure. I think it will be more of the same, is what I would say. Meaning we see e-com and digitalization coming, we will keep the momentum. We are future ready. The channel itself is delivering good money and good profit for us.
You will also recall that I've also said that if we were one day all digital, we'd be as profitable, if not more profitable a company. In terms of channel threat, it's a very happy channel for us. We will only capitalize on the way it's moving forward. In terms of retail generally speaking, we believe that the current retail infrastructure in Turkey may slow down in terms of new store opening, and one can imagine. We, again, if you know the Mavi numbers, we've been a very strong like-for-like company. As things normalize on a store, same store level, I'm quite confident we will deliver very good results. Even under the circumstances, the first seven, eight days of June indicates a very strong comeback. Retail will definitely contribute to a very important role in Turkey, while in international, the digitalization will continue.
In Turkey, although we're coming from a small base, I think this 7% times 12, 15, 20 will continue to increase.
Mr. Mehmet, was your question answered?
Yes. Thank you. Thank you very much.
Thank you.
Thank you.
Ladies and gentlemen, as a reminder, if you wish to ask a question, please press 01 on your telephone keypad. To participate in our written Q&A, please type your question onto the webcast. Thank you for holding. We have no more audio questions. Dear speaker, back to you for the written questions.
Yes. Yeah, we can read the questions and I'll try to answer them. Can you read the question?
Sure. This is related. It's from Ilya. He says, "Is it possible that you will modify the expansion strategy somehow with less opening of physical stores but the shift to e-commerce? It seems to be functioning very well.
Yeah. It's a valid point, Ilya. We will definitely from a ROI perspective, CapEx and investment and return perspective, as I just mentioned, talking to Mehmet also, we will continue to invest and put a lot of resources behind digital. It is already a well-performing channel, well greased up and ready, future ready, across all the countries and markets. The short answer to that question is yes, and we will continue to put good focus behind digital. Moving on to the other written question.
Okay. The next question is from our asset management firm, Mae. She said, "You mentioned that you paid no rent for the closed period.
Yeah.
Was this just deferral or you don't have to pay for that period at all?
Yeah. Okay. Just to be very clear, we did not pay any rent during the period when we were closed. These were not deferrals. We will not be paying any rent for the period we were closed. Starting on June first, moving onwards, we have renegotiated and we brought down the rent ratios accordingly down to lower levels to ensure that rent does not become an OpEx burden on our balance sheet.
She has an additional one. She says, "Do you see any risk for inventory right now?
This crisis, although not welcome, has come at probably a preferred timeline. Meaning we got into our product categories from a spring, summer perspective, all inventory that we bought in in February, March, and also as I mentioned, products did continue to come in that were being manufactured for April, May, and we brought them happily into our warehouses. These are all categories that we will happily continue to sell all the way through the end of September, early October. Therefore, if anything, we are doing utmost diligence not to do silly markdowns, if I may say that. Carry over the products at full time and normal plan sell-throughs. If anything, there might be a bit of conversion, meaning some of the products that might be excess, which if we maintain the current sales might become a non-issue, we have yet to see, into spring-summer.
From an inventory perspective, from a spring-summer, what we bought in and what we will sell through, I feel quite comfortable. Again, just to reiterate, about half of our revenue comes from blue jeans. These are blue jeans are typically seasonless categories. Whether it's in August or February, typical offtake is quite resilient and consistent. It's also pretty much 100% manufactured in Turkey. Our speed to shelf is very fast, with very good quality manufacturers behind us. Hence, from a denim perspective, I feel even more comfortable. The inventory we have is very sellable, and any repeat orders we will make and many further manufacturing will be doing, will be towards good, happy selling and revenue contribution. Thank you.
Okay. The next question is from Goldman Sachs. Paul?
Sorry to cut you here. Can you please move a bit closer? We cannot hear the questions. Thank you.
Okay. He is asking the gross margin outlook. What are you seeing in the market? As players reopen the stores, are there large discounts to clear inventory?
There is varying activities depending on the brands and categories. From a Mavi position perspective, similar to what I mentioned in terms of maintaining rent ratios, from a IFRS 16 like-for-like mindset, we do hope for the rest of the year to maintain and defend our gross margins. Therefore, when I talk with my category and marketing teams, we are not at this point envisioning over and above markdowns to liquidate the inventory. The inventory we have is good, it's quality, it's fresh, it's appealing, and the way it is being selling through, both on the internet digital line and on the stores, is very encouraging. And we will maintain a reasonable and a solid sell-through activity for the rest of the year.
Okay. The next question is, can you please update on the international sales, especially the sales trend in U.S.?
Of all the markets, I mean, overall, international markets, as you know, came down in terms of volume similar to Turkey, although it's a bit because it's wholesale driven, the percentage with which it came down is slightly lower than Turkey as a percentage. If you look at the phasing and so on, it is a similar close down period that we went through across all the countries, whether it's Germany, Russia, U.S., or Canada. The U.S. business is actually of all the international business, is the best performing business. If not for anything, it's because it is the most digital and most progressive part of our business. Through this process, this e-com and digital connections and customers we have, has sustained the business.
As we are starting to come back to our offices and things are normalizing step by step, I believe the U.S. business will be a net positive contributor for the rest of the year moving forward.
We have our next question from Yavuz from Tantor. He says, "When do you think Mavi could go back to last year's revenues?" A bit into Turkish lira terms, is next year possible to beat or at least repeat 2019?
This is a $1 million question. On a normal current run rate basis, if you ask for the first weeks of indication of how business has been ramping up, my answer would be, it would be easy for us to get back to 2019 Turkish kind of levels revenues next year. Should there be another close down or certain other second waves and other uncertainties in the market, that's what we have to deal with. Generally speaking, I'm very bullish at this point in time. Actually what we're trying to do is cherish every positive news and go after every single sale on a daily basis.
The next question is from Osman from Ambrosia Capital. He says, "While it may be a bit early, are you seeing or do you expect to see material changes on the competitor front, both in Turkey and international markets?
Generally speaking, the apparel industry has a lot of inventory. That's the $1 million question everybody's talking about. That's the talk of town, that for a couple of months where people were not able to sell, quite a few of the apparel industry players have inventory problems and hence, have to deal with where they are. From where we stand, I repeat, the inventory we have, the speed with which we can do replenishment, the open-to-buy management culture, the denim, the fact that 50% of our business is denim-centric, I believe, it is less of a concern. It is still a challenge. It is less of a concern for me moving forward. As I mentioned in the presentation, it will take us a few quarters in terms of getting the working capital ratios straightened out.
As we continue to sell and if we continue to sell at the rate we are selling right now, in quarter three, quarter four, we should hit a more normalized plateau moving forward.
Goldman Sachs, Paul, has a follow-up. He's asking, in the U.S., what % of the sales are digital? Are you concerned with some wholesale partners closing permanently?
More than half of what we sell in the U.S. is in digital. In terms of all the customers that we've been partnering, whether it's the specialty and department stores, we have not lost any significant customers. Although there have been deferrals in terms of payments. Just as we have been very good with our business employees in terms of salaries and relationship, we are taking very good care of our business partners in terms of making sure that their preferred choice of brand remains Mavi. At this point in time, whether from a collection point of view or from a distribution perspective, we don't see major hits. How it will play out down the line, a couple of months down the line, we will see.
It also depends on how fast the U.S. is pumping up the money to revitalize its economy and how fast the U.S. will be able to come back to a normal or a new normal. We are closely monitoring. As I said, generally speaking, U.S. part of the business is a part of the business where we are very proud of, and I'm very proud of the team and the work that they're doing there.
Our next question is from Murat Ceylan from QNB. He's asking, will you reconsider the dividend decision if business improves more quickly?
The dividend decision for this year has been taken. Hopefully next year we'll get back to handling that, and making the payments accordingly for the next year, but not this year.
Okay. John from Franklin Templeton has a few questions. The first one is, what is CapEx in nominal terms in your budget?
We've typically allocated less than 5% of our spend on CapEx, and I think for the rest of the year, because we did have a ramp-up in Q1, both on IT, which is one-off for this year especially, and certain store openings for quarter 2. Moving forward, I think the CapEx ratio as a part of our total revenue will get back to its normal levels, what we've been reporting of being less than 5%, 3%-5% typically. Any other question?
Yeah. The next question is, do you think there is room to cut cash OpEx further, especially?
The OpEx management will continue diligently. Actually, as we speak, we are looking at what other costs that we can do away with. Currently, we've taken bulk of the measures that we could. Again, to reiterate, we will maintain and we hope to maintain our sales force and the headcount through the period. Beyond that, we are looking at all potential travel-related, investment-related OpEx that is cuttable. Of course, we're looking into any further opportunities on a daily basis.
Okay.
That wraps up the written questions. We can ask if after these questions, the audience has any other questions. We can call it a day. Maybe you can take it from here.
We have one last question from Berna Kurbay, BGC Partners. Please go ahead.
Yes.
Thank you for the presentation. I have two questions. The first one is about the e-commerce side. I noticed in this presentation that you provide the contribution from Marketplace versus mavi.com. I was wondering if you have any preference between one or the other in terms of how you allocate resources going forward, in terms of profitability or in terms of reach. My second question is about the inventory level. As of the end of April, the first quarter, you have over TRY 611 million, TRY 600 million of inventory. Have you seen this level go up since then? Has it started coming down off of a peak, at the very least? Thank you.
Okay. Let me start with the e-commerce piece. From a marketplace mavi.com perspective, both channels are profitable for us. The business is moving at this point in time faster, as you can see from what I reported in the marketplace, predominantly because most of our business model is switching over from wholesale.com to marketplace.com operations. Generally speaking, any and every brand prefers to have, or at least from Mavi perspective, I should say, have the business on their own mavi.com, in our case, our own mavi.com to grow faster. The reality is there are a lot of new "shopping malls" like Amazon, like Wildberries, like Trendyol that are emerging or Hepsiburada that are emerging in every single market. As Mavi, we have to learn to compete also in these multi-brand facets. Therefore, it is for me not a matter of whether I have a choice or not.
It is a matter of how do I continue to build the businesses in both channels profitably, which for the time being, I feel quite confident and bullish with the good brand, the good service, and the good relationship that we have been able to build with these channels. From an inventory perspective, I don't have the exact numbers in terms of whether the reported TRY 600 million has gone up, but my guess, and IR can come back to you and should anybody have, and we will be more than happy to explain, is that the numbers would probably have gone up because this was end of quarter one. There will be a bit more inventory that has continued to come through. Probably hitting a certain high in end of April and then gradually coming down in May, June, would be our normal cycle of inventory management.
Thank you, Berna.
Thank you.
We have no more questions. Yes, Duygu, back to you for the conclusion.
Well, thank you very much. Thank you for joining us in this quarterly update. I look forward to joining all of you in good health with even better news on the quarter two update. In the meantime, my finance team, my IR team, and myself, we are as always fully open to take any questions you might have, and we will do our best to keep you on the spotlight as to how we are best managing Mavi. I look forward to catching up with all of you. All my best. Take care. Cheers.
Thank you. This concludes today's conference call. Thank you all for attending. You may now disconnect.