Okay, great. It's Matt Boss, retailing here at J.P. Morgan. Really happy to be joined by Michael Kliger, CEO of Mytheresa, for today's fireside chat. Just on background, Mytheresa is a leading luxury multi-brand digital platform shipping today to over 130 countries worldwide, with over 900 million GMV, and since 2019 has grown at a CAGR of nearly 20%. So maybe with that, I'll kick it over to Michael for some opening remarks, and then we'll progress with the fireside.
Thank you, Matt, and very happy to be here. I think it's a very interesting moment in the luxury sector. Anyone that followed over the last 18 months, there was a constant news flow. And for me, looking at our business, but also looking at the sector, it feels like we are following a perfect textbook of what happens after a boom and a sudden slowdown, which the luxury sector in large had experienced. And we clearly hit the trough last year, and with that, consolidation is happening. We are participating actively in the consolidation, but some of the big players in the U.S. are consolidating also on the brand side. And so I think we are getting into a healthier and more disciplined step from which to grow again. Our numbers have turned as of the new fiscal year. We always start in summer. We have grown again.
We are profitable again. We are on the trend to improved numbers, and so it's a really pivotal moment in the industry and quite exciting also on the inside.
I wanted to jump right on that, the pivotal moment. I mean, there's clearly a lot of consolidation, a lot of fragmentation right now in the luxury landscape. What does that mean for Mytheresa? How does that position you?
I mean, I think in luxury, there is a sense of scale that is different from many other industries. Scale per se is not offering all the big advantages that it does in under more capacity-driven, but what it is is relevance. Relevance is really an asset in this industry. On the expected completion of our acquisition of YOOX NET-A-PORTER, we will be the most relevant digital luxury player in the world. Largest global reach you talked about. We ship to 135 markets. We have a huge customer base in Europe, but with the acquisition of YNAP, huge customer base in the U.S., we have a strong business in Southeast Asia. We carry all the major luxury brands, and we are seen as the most luxurious digital player. That puts us into a very strong spot from where to grow, from where to partner even more.
It is retail. It all depends on execution. But we feel very comfortable based on the consolidation that we've seen that we will be operating in more in a healthier industry, let's call it that.
And maybe with that, as we think about the customer cohort that you're catering to, what are you seeing with new customer acquisition and maybe just overall health of that high net worth client? What are you seeing globally?
I mean, right now, the last quarters have been clearly characterized, and you saw in our numbers. The top is super healthy. I mean, the average spend of our top customers, which accounts for close to 40%, in the last quarter grew by 17%. So big spenders that spend already last year grew again per capita by 17%. The acquisition of new clients is where it is slower. We are acquiring a ton of new customers, but we are not growing the number of new customers constantly, which we did in the more boom time, and I think as we move into the next phase, those extremes will normalize. So you won't see 17% growth per top customer every quarter, more normalizing it to five to eight, but you will see new customers, new cohorts coming in.
And I always say growing the customer file is very important, but it's most important the quality. If they don't come back, so it's the repurchase rates. And we always put out the repurchase rates in our investor presentations because that's where you can gauge. I can pump up the file, but it won't be very economical if that's one-time visitors, one-time shoppers.
Right. And on quality of sales, what does the channel look like today across luxury from an inventory perspective? I think you talked about an inflection, but it seems like it wasn't just top line. It seems like it was also from a profitability perspective.
Definitely. The sharp slowdown of demand in 2023, the outcome was clear. Too much inventory in the market, brands, retailers, that drives promotions, that drives down full price selling, and whatever you lose on the margin trickles down to the bottom line, and so 12 months later, if I compare the situation of fall winter 2024 to fall winter 2023, less promotions, higher full price, our gross margin has increased again in the last quarter. It will continue to do so in the next coming quarters, and that now on the positive side also trickles down, and that drives the profitability. We are back in the black with this new fiscal year that also will continue, and what you see in our numbers is also a reflection of the total industry.
Michael, are you seeing anything interesting in terms of maybe changing customer behaviors, whether it's here in the U.S. or in Europe? I know here in the U.S., our economists have projected nearly $60 trillion of wealth creation since 2019. So as you said, high-income consumers seems like they're in a very good place. But any changes, whether it's handbags, accessories, ready-to-wear, just maybe across categories that you thought were more relevant or maybe changing even as more recent as the holiday?
Yeah. I mean, I think one big part of the luxury slowdown is, of course, what happens with the Chinese consumer. We are not as exposed as some of the brands to that. So our strong big markets are in North America, largest market for us today, and Europe, and what we have seen as an ongoing and still continuing trend is our luxury consumers spend more and more on luxury experiences. The vacation sector, if you go into the big market reports, luxury hospitality is the one growing sector by far. Therefore, I think the boom times were very much characterized by single product success, the Balenciaga Triple S. Everyone wanted it. It's more now connected to lifestyles, to occasions. We started in November our Vacation Shop Cruise. We went into the Activewear Edit. We went into ski wear.
Again, this is Pucci Activewear, Gucci Ski Edit, Moncler Grenoble. It's really tied to all these experiences, activities that our customer base is going after. Therefore, I mean, we are present in China. The success we have in Ski Edit. There are 25 million skiers in China. It's very few people, but the sheer size of the country, of course, it's a booming spare time activity in China skiing.
Yeah. Maybe even if we take a step back as we think about the market share opportunity and the fragmented landscape, what would you say makes Mytheresa different? I know the service element is a big part of it. The curated model is another part. But just maybe for those more new to the model, maybe just what do you think differentiates the model overall?
I mean, we have from the starting point defined our core customer as the wardrobe-building, big spending shopper, which has different components in it already. High share ready-to-wear is a big characteristic. Over 50% of our business is ready-to-wear. That drives the desire of newness, but that drives also recurring customers because what you bought in ready-to-wear last season, you want something new. Whereas businesses that are more on the accessory, on the backside, you need new customers coming in because once you have the Andiamo, the Hop, the successful bag styles from Bottega, and I can name many more, you don't need another one. I mean, some people do need another one, but it's not as big. So that's one part. Then really focusing on the high end. I mean, we have consistently grown our AOV over the last quarters.
Again, there is margin is a big driver of profitability, but then unit economics. So if you have more valuable products, more valuable orders, all the costs tied to packaging, shipping, all these transactional costs, of course, are percentage-wise going down. This customer is our core customer, and they want newness. They want special. They want money-can-buy experiences. That's our sort of glue for the loyalty, for the stickiness. You saw some examples in our video. I mean, we invited 40 of our best customers for a two-day experience on the Christina O yacht, the original yacht from Aristotle Onassis. Or we invited, we will start in two weeks' time, our pop-up in Aspen with Bemelmans, an invitation-only pop-up of Bemelmans Bar. First time they ever left the Carlyle in New York, and 40 people will be hosted every evening.
That's also part of this audience that we are carrying, and I think this focus on a special segment, on a lucrative segment, high return rates, not return rates, repurchase rates, high AOV drove the success of Mytheresa in a nutshell. You could argue one of the very, if not only, players that made money always on digital luxury.
And as we think about this potential inflection, both on the top and the bottom line, maybe just if you could elaborate on the strategic rationale behind why now from an acquisition perspective, what's the opportunity? And maybe I know you've outlined a three-year playbook, but maybe just some of the highlights on that roadmap.
The fundamental logic of the acquisition is our belief that to be successful in luxury, you need to be very precise. You need to have a clear personality as a shop, inspiration, curation. If that is true, to take a bigger share of the market, you need different brands to take different corners of the market. You cannot with one brand cover the whole market. That runs the risk of brand dilution. And within the YNAP company, you have NET-A-PORTER, you have MR PORTER , you have THE OUTNET , you have YOOX, brands that have been around for decades, pioneers of the luxury industry in our research, still very strong brands. And that was the rationale. The rationale, of course, does require back-end restructuring. Back-end integration will drive back-end synergies.
But the fundamental logic is if we can cover more of the market with highly profiled businesses, we can replicate the success of Mytheresa and not run the risk of dilution. And with the acquisition, which is expected to complete in the next three months, we will from day one be a EUR 3 billion company with the addition of the YOOX NET-A-PORTER business. As I said, there's back-of-house work to be done, a massive task. I won't diminish that. We are buying a cash-burning business. That's why part of the deal was a cash infusion from day one of EUR 555 million from the seller. But we are looking at a five-year plan of creating a EUR 4 billion digital luxury business worldwide with an expected EBITDA of 8% and more. And we will have the largest and best customer file in digital luxury in the world.
No one will even come close to that. And that comes back to my point about relevance.
Michael, maybe prior to the pandemic, I know you had projections out there of the global luxury digital market and the annual growth rate. How would you think about today going forward? And then if we think about the combined entity post-acquisition, is market share capture the opportunity?
It's market share capture in a growing market because digital is still growing. The trend is still fully intact. Yeah, probably there was a one- or two-year reset, but it's a growing sector. It's driven by changing consumer needs, consumer behavior. So there is market share grab opportunity in a growing market, and that's what makes us very comfortable at our top-line outlook.
And maybe from a balance sheet perspective, just your comfort with overall balance sheet, overall metrics in light of the acquisition as we look forward?
Mytheresa is a debt-free company. We will acquire a debt-free company with EUR 555 million cash from day one sitting on the balance sheet. We will acquire all the stock in the business. This comes for free, for better words. We will have to work through that stock, and old stock does not drive future sales. You need new stock. But the balance sheet is very clean in that sense. Everything that was spent on IT was spent, and we will decide whether we will keep those assets or not, but they have been cashed for. The policy of Mytheresa has always been IT is OpEx, not CapEx, because it's ongoing. We will continue to work on that assumption. We are looking at a recovery plan that brings the business back into positive cash flow within three years of YNAP.
As long as our business has grown, we have been slightly cash positive. But again, we grew from EUR 100 million to close to EUR 1 billion in 10 years without any debt, self-funded growth in a business that buys inventory. So to grow next year, we need to increase working capital. But our ratios are in much better shape than a year ago. The industry was overflowing with inventories. We have decreased inventory as a business, even though we have grown. We went down from a DIO of 290 days - 250 days and still see room to improve further.
And maybe just long-term post-acquisition integration. I mean, what do you see as the right profile for the company, whether it's top-line down to bottom line? I think you cited high single-digit EBITDA margins. But what do you see as the right top and bottom line profile for the integrated company longer term?
On the top line, driven by the changing consumer, we see clearly an ongoing growth of 15%-20%. Again, we hope to be a EUR 4 billion company in a total market that is over EUR 150 billion. If it grows further, EUR 175 billion, so we are not maxing out, but a healthy growth rate that we have in the past, you quoted our CAGR achieved. And bottom line, I think it is healthy to go for this 8% EBITDA, which we have even in boom times achieved 10%. We have come around 7%-8% historically. That's a very good number to feed the growth. We don't want to cash out. We want to continue to grow and grab market share. And therefore, an 8% EBITDA is a good profile.
I think this was fantastic. At that point, I don't know if there's any questions from the audience, but otherwise, thanks for your time.
Each of these three, each of the three brands that you acquired and yours have very unique identities. Do you keep them autonomous to the consumer?
Very good question. And coming back to the rationale, we want to keep them autonomous because we want to cover different parts of the market. So as announced in our investor presentation, we will have different buying teams. We will have different marketing teams. We will have different personal shopping teams. Where we will integrate is on the back end. And I always say, yeah, I need 35 additional buyers, but 35 additional buyers versus a clear profile and the opportunity to grab a different share of market to touch different customers is an enormously profitable investment. And so autonomy on the brand side, but one platform on the tech side, one platform on the logistics sides. For the luxury part, the fashion or the outlet part needs its own stack. It's a very different business. You cannot serve luxury and outlets with the same stack. Something will give.
Either you have something too expensive for the outlet or not good enough for the luxury part.
Follow-on, bricks and mortar, is that part of the future of the new entity?
With a spin, I don't see us as great operators for ongoing stores. I mean, we have a store for historic reasons in Munich. That's where the company was founded. So year-round store, no. But coming back to my example about lifestyle and being present when our customer is there, we are ongoingly and increasingly going into markets and locations with physical presence. We were six weeks present in the Hamptons with a pop-up. We will be two weeks in Aspen with a pop-up. We had physical presence all summer in Europe in beach clubs. That way, absolutely and great opportunity. But year-round, I don't see us as the best operators of stores.
Great. Maybe we'll close it there. Thank you.
Thank you very much. Thanks, Matt.