MYTHERESA(MYTE) - 2022 Q4 - Annual Report

Introduction Presentation of Financial and Other Information The company's financial statements are prepared in Euros under IFRS, with a fiscal year ending June 30, and include definitions for key management performance indicators - The company's financial statements are prepared in accordance with IFRS, not U.S. GAAP, and are presented in Euros[10] - The company's fiscal year runs from July 1 to June 30[12] - Key performance indicators are defined, including non-IFRS measures like Adjusted EBITDA, Adjusted Net Income, and Adjusted Operating Income, which exclude items such as IPO-related costs and certain tax expenditures[14][16] Special Note Regarding Forward-Looking Statements This section warns that forward-looking statements in the report are subject to significant risks and uncertainties, meaning actual results may differ materially from projections - The report includes forward-looking statements that involve risks and uncertainties, and actual results may differ materially from projections[19][21] - Key risks highlighted include industry competition, changes in consumer demand and tastes, the impact of health epidemics like COVID-19, and the ability to maintain brand image and customer relationships[22] Risk Factor Summary This section summarizes the company's principal risks, including intense industry competition, reliance on discretionary spending, operational disruptions, and currency fluctuations - The company operates in a highly competitive industry and its success depends on effectively managing growth, inventory, and currency fluctuations[26][30] - Business is subject to risks from consumer discretionary spending, which can be affected by economic downturns, geopolitical events, and inflation[27] - Operational risks include potential disruptions at its single distribution facility, cybersecurity threats to sensitive customer data, and reliance on key senior management[30] PART I Item 3: Key Information This section details significant investment risks, encompassing business, industry, technology, legal, regulatory, and corporate structure challenges, particularly in the online luxury sector D. Risk Factors This subsection comprehensively outlines material business risks, categorized by industry, technology, legal, regulatory, tax, and corporate structure, including competition, data privacy, and tax residency issues - The online luxury sector is highly competitive, with competition from global multi-brand retailers, mono-brand retailers, and large e-commerce platforms like Amazon[37][40] - The business is highly dependent on discretionary spending by affluent customers, which can be negatively impacted by economic downturns, inflation, and geopolitical events like the war in Ukraine[66] - A significant portion of sales comes from a small group of top customers; in fiscal 2022, the top 3.1% of customers accounted for approximately 35% of gross sales[55] - The company relies on a single distribution facility in Heimstetten, Germany, making it vulnerable to disruptions[92] - The business is subject to complex and evolving data privacy regulations globally, including GDPR in Europe, CCPA in California, and PIPL in China, which increase operating costs and compliance risks[138][139][146] - As a Dutch-incorporated company with its place of effective management in Germany, the company faces complex tax residency issues that could be challenged by tax authorities, potentially leading to double taxation or denial of treaty benefits[232] Item 4: Information on the company This section provides a detailed overview of Mytheresa's business, covering its history, corporate structure, and physical properties, highlighting its position as a leading global luxury e-commerce platform and its growth strategies A. History and development of the company MYT Netherlands Parent B.V. is a Dutch holding company, with its primary business operations conducted through its German subsidiary, Mytheresa Group GmbH - MYT Netherlands Parent B.V. is a Dutch holding company, with its principal business conducted through its German subsidiary, Mytheresa Group GmbH[236][237] B. Business Overview Mytheresa is a global luxury e-commerce platform offering a curated selection from over 200 brands, targeting high-income consumers with strategies focused on customer acquisition, category expansion, and brand partnerships - Mytheresa offers a curated selection from over 200 luxury brands, including Bottega Veneta, Gucci, and Prada, shipping to over 130 countries[239] - The company targets high-income, time-constrained professionals, with the top 3% of customers generating approximately 35% of GMV in fiscal 2022[240] Key Business Metrics (Fiscal 2022) | Metric | Value | Source Chunk | | :--- | :--- | :--- | | Average Order Value | €626 | [241] | | Active Customers | 781,000 (+16.4% YoY) | [246] | | Net Sales | €689.8 million (+12.7% YoY) | [246] | | GMV | €747.3 million (+21.3% YoY) | [246] | | Mobile App Installs | ~5.3 million | [243] | | Mobile Share of GMV | 50% | [243] | - Growth strategies include profitably acquiring new customers, expanding wallet share with existing customers, and accessing new categories such as Mytheresa Kids (launched 2019), Mytheresa Men (launched 2020), and Mytheresa Life (launched 2022)[276][277][278] D. Property, Plant and Equipment The company's facilities include corporate headquarters in Aschheim, a primary fulfillment center in Heimstetten, a new larger center in Leipzig, and retail stores in Munich Key Company Facilities | Location | Type | Square Meters | | :--- | :--- | :--- | | Aschheim, Germany | Corporate Headquarters | 9,830 | | Heimstetten, Germany | Fulfillment Center | 16,970 | | Leipzig, Germany | Fulfillment Center | 54,550 | | Munich, Germany | Retail Stores | 1,727 (total) | Item 5: Operating and financial review and prospects This section analyzes the company's financial performance and condition, detailing operating results, non-IFRS measures, liquidity, and capital resources, highlighting growth drivers like active customers and the Curated Platform Model A. Operating Results In fiscal 2022, net sales grew 12.7% to €689.8 million, with gross profit increasing 23.7% to €355.0 million and Adjusted EBITDA rising 20.7% to €66.3 million, driven by active customer growth and the Curated Platform Model Consolidated Results of Operations (in € thousands) | Metric | FY 2021 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | 612,096 | 689,750 | 12.7% | | Gross profit | 287,043 | 354,992 | 23.7% | | Operating income (loss) | (32,162) | 4,834 | N/A | | Net income (loss) | (32,604) | (7,898) | 75.8% | Key Non-IFRS Financial Metrics (in € millions) | Metric | FY 2021 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | 54.9 | 66.3 | 20.7% | | Adjusted Operating Income | 46.7 | 57.2 | 22.6% | | Adjusted Net Income | 32.1 | 44.5 | 38.6% | - The gross profit margin increased to 51.5% in FY2022 from 46.9% in FY2021, primarily driven by the increasing share of revenue from the Curated Platform Model (CPM), which does not incur cost of sales for the company[331] - Selling, general and administrative (SG&A) expenses decreased to €148.2 million in FY2022 from €157.2 million in FY2021, mainly due to lower IPO-related share-based compensation expenses (€49.9 million in FY22 vs. €71.9 million in FY21)[341] Net Sales by Geographic Location (FY 2022) | Region | Net Sales (€ thousands) | % of Total | | :--- | :--- | :--- | | Germany | 128,616 | 18.6% | | United States | 108,748 | 15.8% | | Europe (ex-Germany) | 276,110 | 40.0% | | Rest of the world | 176,277 | 25.6% | B. Liquidity and Capital Resources The company's liquidity is primarily from cash operations and €60 million in credit facilities, with cash and equivalents at €113.5 million as of June 30, 2022, and improved operating cash flow in fiscal 2022 - Primary liquidity sources are cash from operations and €60 million in revolving credit facilities[369][370] - Cash and cash equivalents were €113.5 million as of June 30, 2022[371] Summary Consolidated Cash Flow (in € thousands) | Activity | FY 2021 | FY 2022 | | :--- | :--- | :--- | | Net cash from operating activities | (16,486) | 54,840 | | Net cash from investing activities | (2,894) | (11,923) | | Net cash from financing activities | 86,790 | (6,095) | - In January 2021, the company fully repaid its Fixed Rate Shareholder Loans using proceeds from its IPO, resulting in a cash outflow of €170.0 million[375] Item 6. Directors and Senior Management This section details the company's two-tier board structure, including the Management and Supervisory Boards, their compensation, committee compositions, and employee information - The company has a two-tiered board structure with a Management Board for day-to-day operations and a Supervisory Board for oversight[444] - Total compensation for the Management Board in fiscal 2022 was €43.7 million, which includes significant share-based compensation expenses[414] - As of June 30, 2022, the company had 1,238 employees (1,196.7 FTEs), an increase from the previous year, with the majority located in Germany[466] - The Supervisory Board has two main committees: an Audit Committee and a Nominating, Governance and Compensation Committee[461] Item 7: Major shareholders and related party transactions This section discloses major shareholders, with MYT Holding LLC owning 76.9% of outstanding shares, and details related party transactions with the ultimate parent company Major Shareholders as of June 30, 2022 | Name of Beneficial Owner | Number of Shares | Percentage | | :--- | :--- | :--- | | MYT Holding LLC | 66,381,495 | 76.9% | | All members of Supervisory and Management Boards (as a group) | 1,714,494 | 2.0% | - As of June 30, 2022, the company had a receivable of €213 thousand from and liabilities of €838 thousand to its ultimate parent, MYT Ultimate Parent LLC, from various intercompany charges[476] Item 8. Financial Information This section confirms financial statements are in Item 18, states no material legal proceedings, and outlines a dividend policy of retaining earnings for growth, subject to board approval and credit covenants - The company does not anticipate paying dividends in the foreseeable future, intending to retain earnings for business growth[480] - The company is a holding company and its ability to pay dividends depends on cash distributions from its operating subsidiaries, which are restricted by credit facility covenants[482] Item 10. Additional Information This section provides supplementary information, including articles of association, material contracts, exchange controls, and a detailed summary of tax consequences for shareholders in Germany, the Netherlands, and the United States - The company is tax resident in Germany due to its place of effective management being there, making it subject to German corporate income and trade taxes[499][500] - Dividends are generally subject to a 26.375% German withholding tax, which may be reduced to 15% for U.S. treaty beneficiaries upon application for a refund[518][519] - While currently exempt, there is a risk that Dutch dividend withholding tax could apply in the future, especially after a protocol amending the Germany-Netherlands tax treaty becomes effective in 2023[554] - For U.S. holders, the company does not expect to be treated as a Passive Foreign Investment Company (PFIC), but this is an annual determination and cannot be guaranteed[587] Item 11. Quantitative and qualitative Disclosures About Market Risk This section outlines the company's market risk exposure, primarily interest rate and foreign exchange risk, which is mitigated through hedging contracts for sales in multiple currencies - Interest rate risk is considered not significant due to the short-term nature of cash instruments and immaterial interest expense[603] - The company is exposed to foreign exchange risk from sales in currencies like the U.S. Dollar and Pound Sterling, while most costs are in Euros[604] - This risk is managed through hedging contracts with durations of less than one year[605] PART II Item 15. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2022, with a previously identified material weakness successfully remediated - Management concluded that both disclosure controls and procedures, and internal control over financial reporting, were effective as of June 30, 2022[615][616] - A material weakness identified in a prior period was remediated in Q3 FY2022 by enhancing the risk assessment process and controls related to the Curated Platform Model[619][620][621] Item 16G. Corporate Governance As a foreign private issuer, the company follows Dutch corporate governance practices, with disclosed deviations from NYSE requirements, particularly regarding Supervisory Board independence and share-based remuneration - The company follows Dutch corporate governance practices, which differ from NYSE standards, particularly regarding board independence definitions[631][633] - A key deviation from the Dutch Corporate Governance Code is that four of the eight Supervisory Board members are not considered independent under Dutch rules due to their affiliation with major shareholders or prior management roles, though they are considered independent under NYSE/SEC rules[637] - Supervisory Board members receive share-based remuneration, a common practice for U.S. listed companies but a deviation from the Dutch code, intended to align their interests with shareholders[642] PART III Item 18. Financial Statements This section presents the company's audited consolidated financial statements for fiscal year 2022, prepared under IFRS, including the report from KPMG AG and all primary financial statements with detailed notes Consolidated Statement of Financial Position (in € thousands) | | June 30, 2021 | June 30, 2022 | | :--- | :--- | :--- | | Total Assets | 521,941 | 614,776 | | Total Current Assets | 343,335 | 413,801 | | Total Non-Current Assets | 178,606 | 200,975 | | Total Shareholders' Equity and Liabilities | 521,941 | 614,776 | | Total Shareholders' Equity | 385,718 | 431,667 | | Total Liabilities | 136,223 | 183,109 | Consolidated Statement of Profit or Loss (in € thousands) | | FY 2021 | FY 2022 | | :--- | :--- | :--- | | Net sales | 612,096 | 689,750 | | Gross profit | 287,043 | 354,992 | | Operating income (loss) | (32,162) | 4,834 | | Net income (loss) | (32,604) | (7,898) | | Basic and diluted EPS (€) | (0.42) | (0.09) | Consolidated Statement of Cash Flows (in € thousands) | Activity | FY 2021 | FY 2022 | | :--- | :--- | :--- | | Net cash from operating activities | (16,486) | 54,840 | | Net cash from investing activities | (2,894) | (11,923) | | Net cash from financing activities | 86,790 | (6,095) | | Net change in cash | 67,411 | 36,822 | | Cash at end of period | 76,760 | 113,507 |