Who shops at NET-A-PORTER? Raise your hand.
Okay. Won't.
I do. I shop at MR PORTER.
Of course they can't.
Who shops at Mytheresa?
Mytheresa .
Interesting.
We have a lot of fans here.
Interesting. Okay.
We have a lot of fans here. Thanks, everybody, for joining us today. I'm Oliver Chen, TD Cowen's Retail, New Platforms, Luxury Analyst. Thrilled to be here with Martin Beer, the CFO of LuxExperience, and I've had the pleasure of knowing Martin for about a decade on this journey that we've all been on together for many reasons. LuxExperience has been exceptional in terms of customer engagement and top customer engagement as well. Okay. Could someone close the doors, too? If you guys don't mind. We're buy rated $8 on 23x EV to EBITDA. As you mentioned, it's a great portfolio of brands, NET-A-PORTER, MR PORTER, Mytheresa, and YOOX. We'll kick it off, Martin. You closed the acquisition of YNAP a little over a year ago, and you became LuxExperience. What does this platform look like currently? Where does the business stand today?
We are in a volatile consumer environment, and you have a big margin expansion opportunity.
Exactly. Happy to start this off, the after lunch spot is always difficult. You would agree that LuxExperience is one of the stocks that has the highest value creation potential of the companies that you are meeting today. Let's talk about what are the segments of the group and where do we stand? The legacy is the Mytheresa, and most of you known it, and we IPO'd it with Mytheresa. There's a lot of discussions on the customer. Mytheresa is really focused on the top customer, on the top luxury customer. When we talk about the luxury market, we really need to understand that this is the top customer. 4% of our customers make 40% of the revenues. High concentration on the top. When we IPO'd, it was, I think, 3% doing 30%. We are increasing the top customer.
Mytheresa is focusing around three main value drivers. The first is inspiration through curation, focusing really on the top customer. It's not so much transactional, but it's really on inspiring through the curation and through very intense brand collaborations where we get exclusives and collaborations and pre-launches with the brands. Second is excellence in execution. We have the highest Net Promoter Score in the industry. This was also always core of our DNA. The third is this community-building. Very important for top customers. Very important also on the online with physical events and style suites, and we are enabling the community-building. That is very important for our top customers.
That leads to the two main aspects of why Mytheresa has always been profitable, even in difficult times, and has a very resilient business model is first, this highly loyal top customer base, which come back without significant marketing or discounts. Very strong focus on the top customers that also enables a very high full price share, which is a KPI in our business. The second is the very high AOV. Over EUR 850, that gives you a lot of unit economics. That's why profitability for Mytheresa was key. We acquired YNAP with the brands NET-A-PORTER, MR PORTER and YOOX. We wanted to do so to increase the relevance, and we looked at the customer profiles, and we only have a 10% customer overlap of Mytheresa and NET-A-PORTER and MR PORTER. Very low overlap.
NET-A-PORTER, MR PORTER is selling more through editorial content and brand discovery. The Mytheresa customer is more a customer that knows around which brands she or he prefers, and then goes through inspiration and events. Very low customer overlap. That was the main reason for the customer acquisition. Obviously, we are working on the transformation. The transformation is very much focused on SG&A.
We always called out, and you mentioned that also in your reports, the more than 1,000 basis points SG&A cost ratio difference. This is driven by IT. We're in the middle of the IT re-platforming that will end in the beginning of calendar 2028, and also simplifying and streamlining the operating model. We have been closing warehouses in Dubai, Hong Kong, and passing the Clifton, New Jersey, warehouse to the new operator of O Group , consolidating the studio operations and customer care.
Where do we stand today? A group EUR 2.5 billion revenues. 40% is Mytheresa, another 40% is NET-A-PORTER Luxury, and 20% is YOOX. We will finish the fiscal year with breaking even on the group level. On Mytheresa, you saw that we already achieved a significant profitability improvement from the 4% 18 months ago, now to 6%. We're right in the middle of increasing the profitability on Mytheresa. You also saw that Mytheresa, even in this very difficult quarter, in this difficult industry setup, is growing double-digit, 10% on constant currency. That was quite remarkable, and at the same time, increasing gross profit margin and overall profitability. We are now concluding this transformation year. Fiscal year 2026 is the transformation year, and are now focusing the group on growth.
I guided that this quarter, April, May, June, we expect to see growth not only at Mytheresa, but also at NET-A-PORTER and MR PORTER, and at YOOX in the next fiscal year, so July to June, fiscal year 2027. The whole group will grow April, May, June, and is set for continuous growth in fiscal year 2027. Maybe last point on where do we stand. We finished the quarter with EUR 436 million cash. That's almost half of my market cap. No debt, no bank debt, which is great. We have a multi-year transformation plan that is fully funded, and therefore, we are in the great position to be the clearly undisputed leading global multi-brand digital luxury platform, and have a clear transformation plan where we are right in the middle with significant milestones achieved.
This plan is fully funded, and now we are embarking on growth.
What is underpinning your enthusiasm for growth? We have a sentimentally weak customer that's still spending, and you have a healthy high-end customer.
Exactly.
Geographically, could you brief us on Americas' relative to Europe and pockets of strengths, or what are the major differences?
Yeah. The overarching trend, exactly as you called it out, is the top customer. The top customer looks at the stock markets, looks at commodities, looks at real estate, maybe not in China, but everywhere else, and is happy, and has significant wealth increase, and therefore, is also increasing our spend. The health of the top customer is stronger than a couple of quarters ago. I would definitely say that this is where we saw at Mytheresa in last quarter, so January, February, March, and despite the March Ukraine conflict start, we grew our top customers at Mytheresa +18%. 18% growth in our top customers. That is quite remarkable, driven also by the U.S. Mytheresa grew in the U.S., +33% on constant currency revenues. We've always been there. We've always grown, as you know, double-digit, but 33% is remarkable.
U.S. has been and will continue to be a strong growth contributor. Europe is very stable, and Europe is not Europe. There's huge differences between the countries. As always, southern parts of Europe are very strong. Italy, Spain, Portugal, a bit of France. Also, Greece, very strong now. Eastern Europe countries, Romania, Poland, very strong. Then we have the classic non-performers, Germany, Austria, Switzerland, being a bit more difficult. Europe is not Europe. Huge differences.
Yeah.
Europe overall is a great, stable contributor. It's around 55% of the Mytheresa revenues. Rest of world, always a mixed bag. The good thing for us is we can grow wherever we want to grow, and we don't need facilities on the ground.
Very strong. Korea has been very strong, Singapore, Australia, Canada. Rest of world and parts of Asia, also very strong. China stays very sticky. Yeah.
What's been the toughest part of the re-platforming? We have a lot of confidence in you to be able to do this, given your consistency and track record, but it's not easy. Can you do it quickly, or what are the next catalysts for this?
The core and why Richemont chose us to do this was our IT platform, because the IT platform is one of the also challenges that YNAP had, and they built up a very inflexible IT platform. They looked at Mytheresa and looked at our IT platform, and we had a similar IT re-platforming program a couple of years ago. We have a great modular setup on shop checkout, PIM, order management system, which is brand new. It's our own self-developed platforms. We have the team to do it. That's why the core of the transformation is the IT, and that takes time. Next month, we will go live with our new ERP focused on accounting and controlling, finance ERP, and the whole IT re-platforming will be finished in the beginning of calendar 2028.
Yeah.
It's a trajectory, IT-focused. On the operations, we are much more advanced on the consolidation that I mentioned on warehouse, customer care, and studio operation.
What will be the hardest part of the next six months?
The hardest part is always on the people side.
Yeah.
That's for every transformation. Always, you have to clearly identify and distinguish between people that are really motivated and willing to change, to throw established ways overboard, and that should be part of the team. You have to then also quickly identify those who are not willing and capable to go that way. The next months is really set on growth.
Yeah.
Because the transformation plan we're executing, and we are fully in line with the plan, and we spend a lot of time in the diligence of seeing, okay, what needs to be done and how to go about it. We are good in execution. We can do this. Right now, with the newly established commercial teams, l eadership teams in the store, they have adjusted the merchandising strategy, the buy, and the marketing strategy, and we have to prove that we can grow from that base. The last quarter is NET-A-PORTER, MR PORTER, last quarter of - 5% on constant currency, NET-A-PORTER, MR PORTER, April, May, June.
Yeah
I got it for growth. This will be the key focus area to really see how we can translate all the activities that the commercial teams have done into growth.
Refresh us on your guidance. The past quarters have been relatively in line with some tweaks, but where are you with the margin range of guidance and also revenue?
We guided for fiscal year 2026. Overall stability of this very differentiated group, very strong growth of Mytheresa, NET-A-PORTER, MR PORTER. Also, deliberate action to focus on the healthy core of customers, not repeating the very strong promotional activities that they've done, especially in the past quarter. Very much revenue-focused, not so much caring about the profitable promotions. That's why we didn't want to repeat that. Revenue is not the core logic for us. YOOX, also complete different logic, defocusing on very costly and unproductive overseas sales. It doesn't make sense to send a EUR 150 shirt to a Japanese customer and cross-dock it via Dubai. It doesn't make sense. Therefore, we are focusing more on Europe. Thereby also deliberate actions on focusing on the healthy core of the customer and therefore accepting revenue decline.
That's fiscal year 2026 is then the logic of having stability on the top line and the mix of those three segments. On the bottom line, we reported the second consecutive quarter being profitable. Q2 and Q3 were profitable. We want to end and guide it for fiscal year 2026, also to have the break-even on the bottom line. Also, knowing there's huge differences in the segments, that's why we talked about the Mytheresa heritage.
Already 6% adjusted EBITDA profitability with EUR 1 billion revenues. NET-A-PORTER, MR PORTER, there's no structural barrier to also achieve a similar profitability with them. YOOX is a more comprehensive restructuring, therefore we have to do what needs to be done. Break- even of YOOX will take 12-15 months on adjusted EBITDA profitability. This is the guidance. In the next earnings call, I will then talk more about fiscal year 2027 and t he longer-term outlook.
The core aspect of our group and what is our north star is to achieve the EUR 4 billion revenues, net sales, at a profitability of 7%-9%. That is also the reason why we talked about value creation. We call this out for medium term, this is around fiscal year 2030. 7%-9% adjusted EBITDA profitability at EUR 4 billion revenues. That gives you an EBITDA number. If you multiply that with a multiple, then you clearly see the difference to my market cap today, which is around EUR 1 billion.
Yeah. What's going on with having EUR 400 million of cash? What do you think people are not understanding as well as they could or should?
There's some technical reasons you're well aware of a very small float in the share, so not that many shares are traded. That keeps certain long-only, bigger investors on the sideline that follow the story and are really supportive, but say, "Hey, I want to build up a significant position that I cannot do." For the rest, we have to continue to perform, to deliver on the transformation plan, and see how the overall industry will continue to perform, because we should not forget exactly as you said, that the aspirational customer and most luxury groups sell bags or focus more on bags, which is more attuned towards an aspirational customer and not like us, we are ready-to-wear, wardrobe-building sellers.
We have a revenue share of 60% of ready-to-wear. Very much different focus, and that's why revenue of peers carrying LV and others were negatively impacted. Therefore, this has to also then be visible to certain investors to see, okay, I understand that the overall luxury segment is set for growth and will continue to perform.
We have had unprecedented creative change. We've been in a quiet luxury moment, but expressive luxury is something you're watching across the whole portfolio of brands, even though I always see you in the same outfit.
I know. Sorry about that.
Well, you're very consistent.
Yeah.
That is a testament to your execution, too. What's happening now in fashion in terms of quiet and loud and change? Clearly, Dior and Chanel are making, and Gucci.
Yeah. No, there's a lot of change.
Yeah.
In the last months, for example, Pucci was the most successful brand for us in the U.S.
Pucci?
Yeah.
Wow.
They're a very small brand.
You did the Money can't buy experience with Pucci, too.
That's true. Yeah, and the others, obviously, you're right. We also had some event with Saint Laurent and Gianvito Rossi.
As you always rightfully call it out, the polarization in the luxury market continues. There are brands that are a really strong performer. Brunello, all the publicly listed or non-publicly listed brands are really performing strongly. A lot of them are focused on high quality, so more the quiet luxury part, and other brands are not performing that well. As you rightfully call out, with a lot of designer changes, the inbound from brands to us continues to be even stronger because they want to reposition their brand a bit different. That is mostly easily done, not to rely just on people that come to your brand.com, but they do activities with us, actions with us as we are a multi-brand platform and help them to expose the new direction then to a wider target group.
Therefore, the inbounds from brands are very strong and the collaborations we do and the events as always. That really differentiates us and also is a key sentiment to the high barriers to entry in this market. You have to build up a very strong relationship with those brands to clearly establish trust that you are doing the right things, that you understand and protect their brand equity. Therefore, it's really giving a lot of confidence to see how strong and ever-increasing the brand collaborations are. That is kind of the flywheel as we always talk about, because that attracts also a lot of top customers that are really building up their wardrobe and ready-to-wear focus, because every week there is something new on our platforms, like an exclusive pre-launch, an event, a marketing campaign, and that attracts a lot of top customers.
The brands see that and say, "Okay, I want digital exposure to those customers. I want to work together with you to have access to this." As the brands are more and more also into this clienteling mood, to not just accept the typical aspirational customer that saves up money and then buys a bag every two years.
Martin, you also spent more time this quarter discussing AI, including content search, merchandising, among others, and a partnership with Vertex AI. Where do you see AI creating the most value in your business?
There's multiple aspects to AI, and AI is, I think, just at the starting point. It has been very much the focus, and the most effective focus was in the last years on marketing effectiveness and efficiency. This self-learning algorithms that we implemented very early on really identifying the LTV over CAC. Really identifying what is the expected lifetime value of the customer. You talked about that earlier.
Did you not really identify it before?
Well, you have to improve it and learn because, as you know, brands are very dynamic. Everything that we sell, 70%-80% of what we sell did not exist last year. The brands evolve, and the customer evolves; therefore, the LTV, the expected lifetime value, is very key for us. You mentioned that earlier, we have the biggest database on luxury customers. We are also sharing information with the brands on those multi-brand shopping behavior of certain customers, so they learn if they relaunch certain products, what are the price points that this customer bought before? What other products they buy? This is also very involved. Coming back to AI, this triggers to accept higher customer acquisition cost for certain keywords and certain product selections and certain paths.
What was the most ironic example to you that you didn't believe, but it's true?
I didn't see any surprises. Obviously, it is true that a top customer not only buys Loro Piana and Brunello Cucinelli, they also buy different brands, and we always take good care of seeing what is the best fit. Is this brand might be priced much lower but really intuitive towards the top customer. Even the product category, the brand, so like the Brunello coat or Loro Piana or Cashmere sweater, is really a very strong indicator of future lifetime value. The Alexander McQueen sneaker is not. Constantly evolving. Marketing efficiency and effectiveness has been the core of our AI use, and that goes now to SEO search and agent to agent communication. We talked about exactly, you called it out.
Yeah
In the past quarters, the focus on personalization, real-time personalization, the whole product catalog, recommendations is a very strong focus. The next months will have AI even more focused on operational efficiency. For example, the transformation on the IT side. There AI will come more and more into place, help on achieving additional cost savings and doing this also on a high performance.
Thank you. Open up to audience for any questions. Feel free to raise your hand if you have any questions. Question here. I'll repeat it to you.
Do you see physical retail as part of your future?
Physical.
Physical stores, physical retail as a place of discovery.
Yeah, Oliver's always pushing and saying you need physical experiences.
I just want to live it all with you together in addition to.
We have high respect of running a big box or a small box store in a high street. It's a different execution and therefore, what works well for us, and you're completely right, we have to amplify the service element, although we are already doing a couple service elements, and I can talk about this. The physical experience, we are significantly increasing. Pop-up stores.
How do you manage that cost or how will you think about occupancy relative to marketing as a percentage of sales?
80% of our marketing costs are performance marketing. We used to do 20% of what we call offline, which is events and those pop-up. There's much more value in those pop-up events in Aspen, Hamptons, but also on the St. Moritz, where we did three months also invite and come. I always look at the customer cohorts that went there, that attended there, and it's oftentimes bring a friend, and it's remarkable. It's remarkable to see those customer cohorts performing. In Aspen, when we had this Après-Ski event.
Yeah
It was remarkable that half of the visitors, half of the people didn't know Mytheresa that signed up. I want to see this. I want to be part of it. It's a huge potential for us, and it also shows how small we are or how ample opportunity is for us to grow. If you do the math, 800,000 Mytheresa shoppers, customers, 4% top customers, 32,000 worldwide. If you have, for example, Mytheresa, a 23% U.S. share, it's tiny, and it shows how much potential there is on the top customer growth. To see not only growing the top customer, we're also increasing the share than at the top customers.
What's stopping you from doing more of that? Just balancing flattish margins this year versus.
It's execution. On those events and off-price, we are doing a lot more. This marketing spend is increasing 30%. We're really investing there a lot. To really do this, as always, it has to be seamless; it has to be excellent in execution. Also, a couple of brands are doing very successful events themselves, and therefore, the customer knows that as well, and so we have to be highly performant there.
You need to do a vote for TD Cowen LuxExperience together.
Exactly. Yeah.
Because you do have flawless execution.
Yeah.
That does segue. Should you just go to Gucci direct or should I go to Mytheresa? Why bother?
That's a very fundamental question. If you know what you want, you can go to gucci.com. We're catering to a customer that is driven on inspiration. She doesn't know what she wants, and at 11:00 P.M., a hardworking, mostly woman, or could be a man, she wants to be inspired. She wants to say, "In the next two weeks, I have three events or I go on vacation. What should I look at? Help me solve the problem." Therefore, together with what I said earlier, every week there's something new, an exclusive collaboration, exclusive set of merchandise. We don't underestimate, and you always emphasize it yourself, that curation is very important and is visible to other platforms.
As you do engage, Martin, in saving and expanding profitability, how do you make the right choices to make sure that your customer service is going to be excellent, and you offer highly experiential experiences, too?
It's also in the DNA of our company. Everybody, even in finance, everybody who's also obviously customer-facing, knows the customer that we're catering for.
Knows the importance, really understands what does it mean, top luxury? Even the workers in the logistics center, in the customer care, in the studio operations, everybody knows and understands that customer. That is the core rule for selecting where do I cut costs, what do I do different, where do I consolidate, where do I keep it separate by segments or by stores, to really understand, is this really helping the customer experience? Because this is a key differentiator. Remember, highest Net Promoter Score in the industry.
Which risk factors are you paying attention to most? Of course, the geopolitical Middle East conflict's been uncontrolled. We've had a lot of uncontrollable risk factors.
Exactly.
Where would there be factors that could lead to downside or upside to your revenues?
It's mostly, and we both have lived through a lot of downsides in the last five, six years. Yeah. It's macro. I'm not scared on our ability to execute. I'm not scared to deliver on the transformation plan and to grow. It is the macro and the effects. Who knows? Nobody knows what is expected. Is there further escalation in the Middle East? Hopefully not, but who knows? Is there escalation on the customs side? It's macro.
Yeah.
It's macro that worries me, yeah.
Lastly, which part of the job has been the most fun for you? How has it changed over the years?
I'm not different than a lot of people, driven by building something and having impact. To build this new entity, Mytheresa, and we bought this company, which doubled our size, and to create a unified finance function and to always think about not becoming too corporate, to really stay small, entrepreneurial, fast, pragmatic, and to put this into the brains of everybody, that's a lot of fun.
What are you putting in the brains of everybody?
This attitude.
What attitude?
To not be corporate.
What do you mean? Being corporate is a bad thing?
Corporate is a bad thing.
Why?
For us, corporate is a bad thing. That means long decision processes. In every aspect, a long decision process.
To be agile.
Yeah, exactly. To be agile. The difference is being entrepreneurial or being corporate. That's how we d ifferentiate.
If life moves fast, it passes you by.
Exactly.
Everybody wants the new thing.
Yeah.
Lots of decisions are made by not making a decision, too.
Exactly.
Thank you, Martin. It was lots of fun.
Thank you.