LuxExperience in the second fiscal quarter demonstrated top-line growth and improved profitability for the first time since the company was formed through Mytheresa’s acquisition of Yoox Net-a-porter.
“The turnaround has started and it’s really the result of cost cutting,” Michael Kliger, chief executive officer of LuxExperience, told WWD. “In the aggregate, we are growing and we are profitable, which we believe is a big achievement knowing that we bought businesses that were money-losing.”
LuxExperience — formerly Mytheresa — last April closed its deal to buy Yoox Net-a-porter from Compagnie Financière Richemont, which provided LuxExperience with 555 million euros, no debt and a 100 million-euro credit facility for Yoox Net-a-porter, in exchange for 33 percent of LuxExperience shares.
Kliger said LuxExperience had “a bit of growth and a bit of profitability” in its second quarter, which ended Dec. 31, and cited improvements across various metrics from the first quarter to the second quarter. In the first quarter, both sales growth and profitability were negative.
LuxExperience’s second-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached 22.6 million euros, up from 16.2 million euros in the year-ago period. Adjusted EBITDA margin rose to 9.3 percent in the second quarter, versus 7.3 percent in the prior-year period.
Nonadjusted EBITDA came to 13.2 million euros with an adjusted EBITDA margin of 2 percent, versus minus 5 percent in the first quarter.
Net sales increased 1.1 percent, or 6 percent on a constant currency basis, to 645.1 million euros, from 638 million euros in the prior-year quarter.
Gross merchandise value (GMV) grew 0.2 percent to 684.8 million euros, from 683.5 million euros in the prior-year period.
SG&A costs decreased as a percentage of GMV to 19.1 percent, a decline of 180 basis points, from 20.9 percent in the group’s first quarter. Those figures exclude the impact of capitalized IT development costs for better like-for-like comparison, the company indicated.
Cash flow reached 118.5 million euros, up from minus 150 million euros in the first quarter, in part due to seasonal effects. LuxExperience’s second quarter occurs during the holiday selling season when sales and profits are expected to be best.
The company slightly raised the lower end of its guidance for its fiscal year. GMV is now expected to reach 2.5 billion euros to 2.7 billion euros. The previous forecast called for GMV to grow 2.4 billion euros to 2.7 billion euros. Adjusted EBITDA margin is now forecast at between minus 1 percent to plus 1 percent, compared to the prior forecast of minus 2 percent to plus 1 percent.
“The big message here for the Street is that we are fully on track to achieve, as a group, 7 to 9 percent profitability on an adjusted EBITDA basis and of course, also become a 4 billion euro company within the next five or six years. This is fully backed up by what we see happening now at the company. We were very happy with the second quarter, and we feel fully vindicated the turnaround is starting to work, and we will continue to improve the businesses in Q3 and Q4.”
Kliger said that while the company is improving financially as a group, a lot of the efforts have focused on creating efficiencies and applying best practices at Mytheresa to the other brands, including consolidating warehouses and photo studios and negotiating more favorable contracts with carrier companies.
Breaking the results down by brand, Kliger said Mytheresa had a very strong quarter with 9.9 percent GMV growth, and 12.7 growth at constant currency. Mytheresa achieved adjusted EBITDA of 9.3 percent in the second quarter, or 23 million euros, compared to 16 million euros in the year-ago quarter.
“The number of top Mytheresa customers grew by 13.5 percent and spend per top customer grew by 12.5 percent. These are market share gains.” Asked if Mytheresa was grabbing business from Saks Global, which is in Chapter 11 bankruptcy proceedings, Kliger replied, “I can’t tell you for sure, because we don’t ask customers where have you spent before. But I think it’s a safe assumption. We grew 25 percent in the U.S. last quarter.”
At Net-a-porter and Mr Porter, combined, there was a GMV decrease of 1.9 percent which Kliger characterized as “a great improvement over the previous quarter where we were still minus 10.8 percent.” The adjusted EBITDA came to minus 1.9 million euros, or minus 0.7 percent.
At Yoox, GMV declined 12.1 percent in the second quarter, but that’s an improvement over the 19.9 percent decline in the first quarter. Sales were 125.3 million euros compared to 142.5 million euros in the prior-year period, though there was a larger decline of 19.3 percent in the first quarter, suggesting some sequential improvement.
“The story for Yoox is really that we focus the business very much now on the European markets because that’s where the business is profitable,” Kliger said. A lot of the sales declines came from the U.S. and Asia, where he said Yoox has been reducing its business by 30 percent.
From the Mytheresa cruise campaign.
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