MYTHERESA(MYTE) - 2023 Q3 - Quarterly Report

Financial Results and Key Operating Metrics This section outlines key operating and non-IFRS financial metrics for business evaluation, performance measurement, and strategic decision-making, with data for the three and nine months ended March 31, 2022 and 2023 Key Operating and Financial Metrics Overview This overview details the company's key operating and non-IFRS financial metrics, providing data for the three and nine months ended March 31, 2022 and 2023, to assess performance and trends - The company uses Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income, along with their respective net sales percentage margins, as they are widely used by analysts, investors, and other stakeholders to evaluate companies in the industry. These metrics help highlight operating performance trends by excluding items beyond management's control or not reflective of ongoing operations and performance[6][7][8] Key Operating and Financial Metrics (Three Months Ended March 31) | Metric | 2022 (€ million) | 2023 (€ million) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :--------- | | Gross Merchandise Value (GMV) | 186.6 | 219.8 | 17.8% | | Active Customers (LTM, thousands) | 755 | 838 | 11.0% | | Total Orders Shipped (LTM, thousands) | 1,703 | 1,970 | 15.7% | | Net Sales | 169.5 | 198.9 | 17.3% | | Gross Profit | 82.8 | 90.7 | 9.6% | | Gross Margin | 48.8% | 45.6% | (320 BPs) | | Operating Income | (2.0) | (6.4) | 225.0% | | Net Income (Loss) | (4.3) | (5.3) | 23.2% | | Adjusted EBITDA | 10.8 | 3.2 | (70.0%) | | Adjusted Operating Income | 8.5 | 0.1 | (98.7%) | | Adjusted Net Income | 6.2 | 1.4 | (77.5%) | Key Operating and Financial Metrics (Nine Months Ended March 31) | Metric | 2022 (€ million) | 2023 (€ million) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :--------- | | Gross Merchandise Value (GMV) | 550.6 | 633.6 | 15.1% | | Active Customers (LTM, thousands) | 755 | 838 | 11.0% | | Total Orders Shipped (LTM, thousands) | 1,703 | 1,970 | 15.7% | | Net Sales | 514.9 | 564.9 | 9.7% | | Gross Profit | 260.2 | 282.7 | 8.7% | | Gross Margin | 50.5% | 50.0% | (50 BPs) | | Operating Income | 3.6 | (3.8) | (205.7%) | | Net Income (Loss) | (9.5) | (9.6) | 0.4% | | Adjusted EBITDA | 54.3 | 33.7 | (38.0%) | | Adjusted Operating Income | 47.6 | 25.2 | (47.1%) | | Adjusted Net Income | 34.5 | 19.6 | (43.2%) | Reconciliation of Non-IFRS Financial Measures This section provides detailed reconciliation tables for Net Income (Loss) to Adjusted EBITDA, Operating Income (Loss) to Adjusted Operating Income, and Net Income (Loss) to Adjusted Net Income, including margins, for the three and nine months ended March 31, 2022 and 2023 Reconciliation of Net Loss to Adjusted EBITDA (Three Months Ended March 31) | (€ million) | 2022 | 2023 | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | | Net Loss | (4.3) | (5.1) | 18.9% | | Finance costs, net | 0.3 | 0.7 | 125.8% | | Income tax expense (benefit) | 2.0 | (2.0) | (198.3%) | | Depreciation and amortization | 2.3 | 3.1 | 37.1% | | EBITDA | 0.3 | (3.3) | (1,162.5%) | | Other transaction-related, specific legal and other expenses | 0.3 | 0.4 | 59.0% | | Share-based compensation expense | 10.2 | 6.1 | (40.5%) | | Adjusted EBITDA | 10.8 | 3.2 | (70.0%) | | Adjusted EBITDA Margin | 6.4% | 1.6% | (480 BPs) | Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Three Months Ended March 31) | (€ million) | 2022 | 2023 | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | | Operating Income (Loss) | (2.0) | (6.4) | 225.0% | | Other transaction-related, specific legal and other expenses | 0.3 | 0.4 | 59.0% | | Share-based compensation expense | 10.2 | 6.1 | (40.5%) | | Adjusted Operating Income | 8.5 | 0.1 | (98.7%) | | Adjusted Operating Income Margin | 5.0% | 0.1% | (490 BPs) | Reconciliation of Net Loss to Adjusted Net Income (Nine Months Ended March 31) | (€ million) | 2022 | 2023 | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | | Net Loss | (9.5) | (9.4) | (1.5%) | | Other transaction-related, specific legal and other expenses | 1.3 | 3.7 | 175.3% | | Share-based compensation expense | 42.7 | 25.3 | (40.7%) | | Adjusted Net Income | 34.5 | 19.6 | (43.2%) | | Adjusted Net Income Margin | 6.7% | 3.5% | (320 BPs) | Unaudited Interim Condensed Consolidated Financial Statements This part presents the unaudited interim condensed consolidated financial statements, including statements of profit, financial position, changes in equity, cash flows, and detailed notes Unaudited Condensed Consolidated Statements of Profit and Comprehensive Income This table details net sales, cost of sales, gross profit, operating expenses, finance costs, income tax, net loss, and other comprehensive income for the three and nine months ended March 31, 2022 and 2023 Condensed Consolidated Statements of Profit and Comprehensive Income (Three Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :------------------------------------------ | :----- | :----- | | Net sales | 169,512 | 198,883 | | Cost of sales (exclusive of depreciation and amortization) | (86,747) | (108,137) | | Gross profit | 82,765 | 90,746 | | Operating income (loss) | (1,975) | (6,419) | | Net loss | (4,317) | (5,134) | | Comprehensive loss | (3,979) | (5,614) | | Basic and diluted earnings per share | (0.05) | (0.06) | Condensed Consolidated Statements of Profit and Comprehensive Income (Nine Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :------------------------------------------ | :----- | :----- | | Net sales | 514,914 | 564,866 | | Cost of sales (exclusive of depreciation and amortization) | (254,716) | (282,157) | | Gross profit | 260,199 | 282,708 | | Operating income (loss) | 3,574 | (3,779) | | Net loss | (9,546) | (9,402) | | Comprehensive loss | (10,827) | (8,628) | | Basic and diluted earnings per share | (0.11) | (0.11) | Unaudited Condensed Consolidated Statements of Financial Position This table presents the company's assets, liabilities, and shareholders' equity as of June 30, 2022, and March 31, 2023, highlighting changes in asset and liability categories Condensed Consolidated Statements of Financial Position (As of March 31 and June 30, 2022) | (€ thousand) | June 30, 2022 | March 31, 2023 | | :------------------------------------------ | :------------ | :------------- | | Total non-current assets | 200,975 | 258,872 | | Total current assets | 413,801 | 387,792 | | Total assets | 614,776 | 646,664 | | Total equity | 431,667 | 449,366 | | Total non-current liabilities | 21,237 | 60,754 | | Total current liabilities | 161,872 | 136,544 | | Total liabilities | 183,109 | 197,298 | | Total equity and liabilities | 614,776 | 646,664 | Unaudited Condensed Consolidated Statements of Changes in Equity This table outlines changes in equity components for the periods ended March 31, 2022 and 2023, covering share capital, capital reserves, accumulated losses, and other reserves Condensed Consolidated Statements of Changes in Equity (As of March 31 and July 1, 2022) | (€ thousand) | July 1, 2022 | March 31, 2023 | | :------------------------------------------ | :----------- | :------------- | | Total equity (beginning of period) | 431,667 | 431,667 | | Net loss | (9,402) | (9,402) | | Other comprehensive income | - | 774 | | Comprehensive loss | (8,628) | (8,628) | | Exercise of share options | 1,077 | 1,077 | | Share-based compensation expense | 25,307 | 25,307 | | Reclassification due to cash settlement of share-based compensation | (57) | (57) | | Total equity (end of period) | 431,667 | 449,366 | Unaudited Condensed Consolidated Statements of Cash Flows This table summarizes cash flows from operating, investing, and financing activities for the nine months ended March 31, 2022 and 2023, showing a shift to net cash outflow from operations Condensed Consolidated Statements of Cash Flows (Nine Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :------------------------------------------ | :----- | :----- | | Net cash inflow (outflow) from operating activities | 22,875 | (83,000) | | Net cash outflow from investing activities | (1,702) | (18,895) | | Net cash outflow from financing activities | (4,367) | 1,449 | | Net increase (decrease) in cash and cash equivalents | 16,806 | (100,446) | | Cash and cash equivalents at end of period | 93,526 | 12,940 | Notes to the Interim Condensed Consolidated Financial Statements This section provides detailed explanations and classifications for financial statement items, including corporate information, accounting policies, segment reporting, and financial instruments 1. Corporate information MYT Netherlands Parent B.V. operates a global luxury digital platform via Mytheresa Group GmbH, with MYT Ultimate Parent LLC, USA, as the ultimate controlling party - MYT Netherlands Parent B.V. operates a global luxury digital platform through its subsidiary Mytheresa Group GmbH, with a flagship retail store and a menswear store in Munich[34] - As of March 31, 2023, MYT Holding LLC, USA, holds 78.3% of the company's shares, with MYT Ultimate Parent LLC, USA, being the ultimate controlling party of Mytheresa Group[35] 2. Basis of preparation These interim condensed consolidated financial statements are prepared under IAS 34 and IFRS, using historical cost in Euros, with a June 30 fiscal year-end and a going concern assumption - These interim condensed consolidated financial statements are prepared in accordance with IAS 34 'Interim Financial Reporting' and International Financial Reporting Standards (IFRS)[36] - Mytheresa Group's fiscal year-end is June 30[37] - The financial statements are prepared under the going concern assumption, with management believing Mytheresa Group has sufficient resources to continue operations for the foreseeable future[39] 3. Impacts to the consolidated financial statements due to Covid-19 pandemic, cost inflation, significant promotional activities by competitors and other global uncertainties in the markets While COVID-19 had no major impact, macroeconomic factors like inflation, rising interest rates, and competitor promotions affected net sales growth and gross margin for the periods ended March 31, 2023 - Despite the ongoing COVID-19 pandemic, Mytheresa Group has not experienced significant revenue declines, deterioration of net assets, or other material adverse effects, nor have there been significant supply chain or logistics disruptions[41][42] - Net sales growth for the three and nine months ended March 31, 2023, was impacted by ongoing inflation, rising interest rate uncertainties, potential recession, economic developments, and new uncertainties regarding the robustness of the financial sector in the US and Europe, which affected customer sentiment[45] - The decline in gross margin was due to macroeconomic headwinds and significant promotional activities by competitors to clear excess inventory, resulting in a lower-than-expected share of full-price sales for the company, putting pressure on gross margin[46] 4. Significant accounting policies Accounting policies in these interim statements align with FY2022, with share-based compensation now including cash-settled transactions since December 31, 2022 - The company in these interim condensed consolidated financial statements are consistent with those in the 2022 fiscal year consolidated financial statements. Since December 31, 2022, the company has extended its share-based compensation policy to include cash-settled transactions[47] 5. Critical accounting judgments and key estimates and assumptions Critical accounting judgments and key estimates for these interim statements are consistent with those applied in the 2022 fiscal year consolidated financial statements - In preparing the interim condensed consolidated financial statements, the significant judgments made by management in applying Mytheresa Group's accounting policies and the key sources of estimation uncertainty are consistent with those applied in the 2022 fiscal year consolidated financial statements[50] 6. Segment information Mytheresa Group identifies online and retail as operating segments, measuring performance via segment EBITDA, with certain corporate expenses unallocated - Mytheresa Group identifies online business and retail stores as separate operating segments based on internal reporting and how the Chief Operating Decision Maker (CODM) assesses business performance[52] - Segment EBITDA is defined as operating income exclusive of depreciation and amortization, used to measure performance[53] Segment EBITDA (Three Months Ended March 31) | (€ thousand) | 2022 (Online) | 2022 (Retail Store) | 2023 (Online) | 2023 (Retail Store) | | :--------------- | :------------ | :------------ | :------------ | :------------ | | Net sales | 166,405 | 3,107 | 195,939 | 2,944 | | Segment EBITDA | 12,935 | 907 | 5,500 | 903 | 7. Net Sales and geographic information Mytheresa Group generates global revenue through online business and CPM commissions, with net sales increasing for the periods ended March 31, 2023, driven by the US market - Mytheresa Group earns revenue globally through its online business and commissions for services under the Curated Platform Model (CPM)[59] Net Sales by Geographic Location (Three Months Ended March 31) | (€ thousand) | 2022 | % | 2023 | % | | :--------------- | :----- | :---- | :----- | :---- | | Germany | 30,292 | 17.9% | 32,279 | 16.2% | | United States | 28,342 | 16.7% | 36,376 | 18.3% | | Europe (excluding Germany) | 66,906 | 39.5% | 78,241 | 39.3% | | Rest of World | 43,971 | 25.9% | 51,988 | 26.1% | | Total | 169,512 | 100.0% | 198,883 | 100.0% | Net Sales by Geographic Location (Nine Months Ended March 31) | (€ thousand) | 2022 | % | 2023 | % | | :--------------- | :----- | :---- | :----- | :---- | | Germany | 95,712 | 18.6% | 94,928 | 16.8% | | United States | 81,578 | 15.8% | 97,846 | 17.3% | | Europe (excluding Germany) | 206,035 | 40.0% | 220,147 | 39.0% | | Rest of World | 131,589 | 25.6% | 151,945 | 26.9% | | Total | 514,914 | 100.0% | 564,866 | 100.0% | 8. Cost of sales, exclusive of depreciation and amortization Inventory impairment, included in cost of sales, increased for the three months but decreased for the nine months ended March 31, 2023, reflecting net realizable value changes Inventory Impairment (€ thousand) | Period | 2022 | 2023 | | :---------------- | :------- | :------- | | Three months ended March 31 | (1,551) | (2,780) | | Nine months ended March 31 | (4,544) | (3,269) | 9. Finance income (costs), net Net finance costs increased for the periods ended March 31, 2023, mainly due to higher lease interest expenses, with €4.9 million utilized from the revolving credit facility Finance Income (Costs), Net (€ thousand) | Period | 2022 | 2023 | | :-------------------------------- | :----- | :----- | | Three months ended March 31: | | | | Total finance costs | (314) | (807) | | Total finance income | 0 | 98 | | Finance costs, net | (314) | (709) | | Nine months ended March 31: | | | | Total finance costs | (702) | (1,846) | | Total finance income | 0 | 345 | | Finance costs, net | (702) | (1,501) | - As of March 31, 2023, Mytheresa Group utilized €4.9 million in cash from its €60 million revolving credit facility[65] 10. Income taxes The effective tax rate fluctuated due to non-deductible share-based compensation, with a tax benefit for the three months ended March 31, 2023, from a German tax group formation Effective Tax Rate | Period | 2022 | 2023 | | :---------------- | :------- | :------- | | Three months ended March 31 | (88.6)% | 28.0% | | Nine months ended March 31 | 432.4% | (78.1)% | - The change in the effective tax rate is due to the expenses from share-based compensation plans not being tax-deductible[68] - A tax benefit of €1,944 thousand was recognized for the three months ended March 31, 2023, due to the formation of a German tax group through a profit and loss transfer agreement with Mytheresa Group GmbH[69] 11. Property and equipment Property and equipment increased due to leasehold improvements for a new Leipzig warehouse, with further capital expenditures anticipated in FY2023 and FY2024 - As of March 31, 2023, property and equipment increased by €16,362 thousand to €34,053 thousand from €17,691 thousand as of June 30, 2022, primarily due to increased leasehold improvements for a new warehouse in Leipzig, Germany[70] - Mytheresa Group expects to incur additional capital expenditures of approximately €14 million to €17 million for equipment purchases in fiscal years 2023 and 2024[70] 12. Leases New lease agreements for a Leipzig warehouse, Munich offices, and London offices significantly increased right-of-use assets and lease liabilities - For the nine months ended March 31, 2023, Mytheresa Group entered into a 10-year lease agreement for a new warehouse in Leipzig, Germany, recognizing €25,661 thousand in right-of-use assets and €23,816 thousand in lease liabilities[71] - In January 2023, the company entered into the seventh lease addendum for its existing offices in Aschheim/Munich, recognizing €9,953 thousand in right-of-use assets and corresponding lease liabilities[72] - In December 2022, the company entered into a three-year lease agreement for new offices in London, UK, recognizing €2,197 thousand in right-of-use assets and lease liabilities[73] 13. Other assets and non-current financial assets This section details current other assets and non-current financial assets, noting decreased brand partner receivables and increased DDP duty refunds Other Assets Details (€ thousand) | (€ thousand) | June 30, 2022 | March 31, 2023 | | :-------------------------------- | :------------ | :------------- | | Return assets | 10,096 | 6,697 | | Current VAT receivables | - | 4,401 | | Prepaid expenses | 5,609 | 5,308 | | Receivables from payment service providers | 371 | 1,337 | | Prepayments | 1,465 | 2,441 | | Deposits | 414 | 201 | | Receivables from brand partners | 33,611 | 371 | | DDP duty refunds | 5,261 | 12,787 | | Other current assets | 5,047 | 9,421 | | Total | 61,874 | 42,963 | Non-Current Financial Assets Details (€ thousand) | (€ thousand) | June 30, 2022 | March 31, 2023 | | :-------------------------------- | :------------ | :------------- | | Other non-current receivables | - | 30 | | Non-current deposits | 294 | 506 | | Non-current prepaid expenses | - | 6,935 | | Total | 294 | 7,471 | - As of March 31, 2023, the decrease in receivables from brand partners was primarily due to settlement payments from certain brand partners[74] 14. Share-based compensation This section details share-based compensation arrangements, including IPO-related awards, one-time RSU awards, and annual plans, with a reconciliation of outstanding options and recognized expenses - IPO-related one-time awards include 'Alignment Awards' (options granted to key management members, vesting 25% annually over four years) and 'Catch-up Awards' (phantom shares granted to key management members, vesting immediately on the grant date)[76][81] - Annual plans include the 'Supervisory Board Member Plan' (restricted shares granted to supervisory board members) and the 'Long-Term Incentive Plan' (LTI, restricted stock units granted to key management members, with time-based and non-market performance vesting conditions)[85][89][90][91][92][94][95] Share-based Compensation Expense Recognized (€ thousand) | Period | 2022 | 2023 | | :-------------------------------- | :----- | :----- | | Three months ended March 31 | 10,228 | 6,082 | | Nine months ended March 31 | 42,701 | 25,307 | 15. Financial instruments and financial risk management This section discloses carrying and fair values of financial assets and liabilities under IFRS 9, noting no fair value hierarchy transfers and a net cash flow hedge reserve Financial Instruments (As of March 31, 2023) | (€ thousand) | Carrying amount | IFRS 9 category | Fair value | Fair value hierarchy | | :------------------------------------------ | :-------------- | :------------------------------- | :--------- | :----------------------- | | Non-current deposits | 506 | Amortized cost | - | - | | Other non-current receivables | 30 | Amortized cost | - | - | | Non-current prepaid expenses | 6,935 | Amortized cost | - | - | | Trade and other receivables | 6,019 | Amortized cost | - | - | | Cash and cash equivalents | 12,940 | Amortized cost | - | - | | Derivative instruments (hedge accounting) | 1,051 | - | 1,051 | Level 2 | | Borrowings | 4,899 | Amortized cost | - | - | | Tax liabilities | 21,729 | Amortized cost | - | - | | Trade and other payables | 36,534 | Amortized cost | - | - | - There were no transfers between fair value hierarchies as of June 30, 2022, and March 31, 2023[104] - As of March 31, 2023, Mytheresa Group has recorded a net amount of €758 thousand in the cash flow hedge reserve[106] 16. Events after the reporting period The company will launch its first Employee Stock Purchase Plan (ESPP) on May 29, 2023, enabling eligible employees to purchase ADSs at a discount - The company will launch the open enrollment period for its first Employee Stock Purchase Plan (ESPP) on May 29, 2023[107] - The ESPP aims to foster long-term employee relationships by offering eligible employees the opportunity to purchase American Depositary Shares (ADSs) at a discount (one-quarter of the investment amount)[107] MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's discussion and analysis of the company's financial condition and results of operations, covering key metrics, influencing factors, and liquidity Overview Mytheresa is a leading global luxury e-commerce platform, acknowledging increased global economic uncertainties and cost inflation despite no significant COVID-19 revenue impact - Mytheresa is a leading global luxury e-commerce platform, shipping to over 130 countries and offering a curated selection of over 200 top-tier brands across women's, men's, kids', and lifestyle products[110] - Despite the ongoing COVID-19 pandemic, Mytheresa Group has not experienced significant revenue declines, deterioration of net assets, or other material adverse effects, nor have there been significant supply chain or logistics disruptions[111][112] - Mytheresa faces increased cost inflation across energy, logistics, labor, and other parts of its business model, with macroeconomic factors potentially leading to a recession in certain markets, continuously negatively impacting overall customer demand[114] Key Operating and Financial Metrics This section details key operating and financial metrics, including GMV, active customers, net sales, and adjusted non-IFRS measures, with definitions and reconciliation tables Key Operating and Financial Metrics (Three Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :-------------------------- | :----------------- | :----------------- | | Gross Merchandise Value (GMV) | 186,583 | 219,831 | | Active Customers (LTM, thousands) | 755 | 838 | | Total Orders Shipped (LTM, thousands) | 1,703 | 1,970 | | Average Order Value (LTM) | 617 | 641 | | Net Sales | 169,512 | 198,883 | | Gross Profit | 82,765 | 90,746 | | Gross Margin | 48.8% | 45.6% | | Operating Expenses (Income) | (1,975) | (6,419) | | Net Loss | (4,317) | (5,134) | | Adjusted EBITDA | 10,819 | 3,243 | | Adjusted Operating Income | 8,536 | 111 | | Adjusted Net Income | 6,192 | 1,396 | Key Operating and Financial Metrics (Nine Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :-------------------------- | :----------------- | :----------------- | | Gross Merchandise Value (GMV) | 550,623 | 633,567 | | Active Customers (LTM, thousands) | 755 | 838 | | Total Orders Shipped (LTM, thousands) | 1,703 | 1,970 | | Average Order Value (LTM) | 617 | 641 | | Net Sales | 514,914 | 564,866 | | Gross Profit | 260,199 | 282,708 | | Gross Margin | 50.5% | 50.0% | | Operating Expenses (Income) | 3,574 | (3,779) | | Net Loss | (9,546) | (9,402) | | Adjusted EBITDA | 54,334 | 33,676 | | Adjusted Operating Income | 47,606 | 25,196 | | Adjusted Net Income | 34,487 | 19,573 | - GMV is an operational measure of the total Euro value of processed orders, including product value, shipping, and duties, net of returns, VAT, applicable sales taxes, and cancellations. Active customers are unique customer accounts that have made at least one online purchase in the preceding twelve months. Total orders shipped represents the total number of online customer orders shipped in the preceding twelve months. Average order value is the total GMV of online orders divided by the total number of online orders in the preceding twelve months[121][122][123][124] Factors Affecting our Performance This section discusses key performance factors, including economic trends, brand awareness, luxury brand partnerships, online market growth, category expansion, inventory management, and CPM - Overall economic conditions and changes in consumer behavior significantly impact the business, with positive economic conditions encouraging customer spending, while economic weakness can have a negative effect[132] - The company will continue to invest in brand marketing campaigns to expand brand awareness, attract new customers, and develop in-house product content[133] - The business model relies on offering customers a curated selection of top luxury brands, and long-standing relationships with leading luxury fashion brands are a competitive advantage[134] - Online penetration for luxury personal goods is projected to increase from 22% in 2021 to 34% by 2030, with the company maintaining a leading position through brand partnerships and exclusive products[135] - The company has expanded into Mytheresa Kids (2019), Mytheresa Men (2020), and Life (May 2022) categories to capture these underserved markets[136] - The company leverages customer data and collaboration with brand partners to optimize inventory, predicting demand by analyzing customer feedback and real-time purchasing behavior, thereby reducing portfolio risk and increasing sell-through rates[137] - The company will continue to invest in operations and infrastructure, including the new Leipzig warehouse, to support growth, improve efficiency, localize offerings, and enter new markets[138] - The Curated Platform Model (CPM) integrates Mytheresa Group's direct retail business with brand partners, offering opportunities to source high-demand products at scale, improve capital efficiency, and increase revenue and profit[139] Components of our Results of Operations This section explains key components of financial performance, including net sales, cost of sales, gross profit, operating expenses, and finance income (costs), net - Net sales include revenue from sales of apparel, bags, shoes, accessories, fine jewelry, and other categories, as well as shipping fees and delivery duties, net of promotional discounts and returns; platform fees generated by the Curated Platform Model (CPM) are also included in net sales[141] - Cost of sales (exclusive of depreciation and amortization) includes the cost of goods sold (net of trade discounts), as well as inventory impairment and product delivery costs from brand partners; for CPM revenue, no cost of sales is incurred[142] - Gross profit equals net sales less cost of sales (exclusive of depreciation and amortization)[143] - Shipping and payment costs primarily include shipping fees paid to fulfillment service providers, packaging costs, delivery duties for international sales, and payment processing fees paid to third parties[144] - Marketing expenses primarily include online advertising costs aimed at acquiring new customers, marketing to existing customers, and other marketing costs such as event production, communication, and creative content development[145] - Selling, general and administrative (SG&A) expenses include personnel costs (salaries, benefits, and other personnel-related costs) and other general and administrative expenses (IT expenses, uncapitalized lease rents, consulting services, insurance costs, share-based compensation expenses, and other transaction-related, specific legal, and other expenses)[146] - Depreciation and amortization include property and equipment (including right-of-use assets capitalized under IFRS 16), leasehold improvements, and amortization of technology and other intangible assets[147] - Other expenses (income), net primarily include gains and losses from foreign currency fluctuations, gains and losses from the disposal of property, plant, and equipment, and other miscellaneous expenses and income[149] - Finance income (costs), net for fiscal years 2022 and 2023 primarily relates to lease interest expenses and the revolving credit facilities with Commerzbank Aktiengesellschaft and UniCredit Bank AG[150] Results of Operations This section analyzes the company's financial performance for the three and nine months ended March 31, 2023, covering GMV, net sales, cost of sales, gross profit, and operating expenses - Gross Merchandise Value (GMV) increased by 17.8% to €219.8 million for the three months ended March 31, 2023, and by 15.1% to €633.6 million for the nine months, primarily driven by growth in active customers and increased GMV per active customer[154] - Net sales increased by 17.3% to €198.9 million for the three months ended March 31, 2023, and by 9.7% to €564.9 million for the nine months. Net sales growth lagged GMV primarily due to brands shifting from a wholesale model to the Curated Platform Model (CPM), where only platform fees are recognized in net sales[155] - Cost of sales (exclusive of depreciation and amortization) increased by €21.4 million to €108.1 million for the three months ended March 31, 2023, and by €27.4 million to €282.2 million for the nine months. As a percentage of GMV, it increased from 46.5% to 49.2% for the three months but decreased from 46.3% to 44.5% for the nine months, the latter primarily benefiting from increased CPM revenue and the impact of competitor promotional activities[156] - Gross profit increased by 9.6% to €90.7 million for the three months ended March 31, 2023, and by 8.7% to €282.7 million for the nine months. Gross margin decreased from 48.8% to 45.6% for the three months and from 50.5% to 50.0% for the nine months, primarily impacted by macroeconomic headwinds and competitor promotional activities[157] - Shipping and payment costs increased by 25.3% to €31.5 million for the three months ended March 31, 2023, and by 18.7% to €83.8 million for the nine months, primarily due to an increase in total orders shipped and a higher share of international sales[158] - Marketing expenses increased to €25.7 million for the three months ended March 31, 2023, and to €79.9 million for the nine months. As a percentage of GMV, it decreased from 12.5% to 11.7% for the three months and remained at 12.6% for the nine months, primarily attributable to a continued focus on high lifetime value customers and strong performance from the existing customer base[159] - Total selling, general and administrative (SG&A) expenses increased by 5.8% to €36.2 million for the three months ended March 31, 2023, and by 1.4% to €112.9 million for the nine months. Adjusted SG&A expenses as a percentage of GMV increased in both periods, primarily due to higher personnel expenses, travel expenses, energy costs, and IT expenditures[161][163][164] - Depreciation and amortization expenses increased to €3.1 million for the three months ended March 31, 2023, and to €8.5 million for the nine months, primarily due to increased depreciation of right-of-use assets for the new Leipzig warehouse in Germany[167] - Net finance costs increased to €709 thousand for the three months ended March 31, 2023, and to €1,501 thousand for the nine months, primarily due to increased lease interest expenses[168] Liquidity and Capital Resources This section discusses liquidity sources, including cash from operations and credit facilities, noting a shift to net cash outflow from operating activities and increased investing activities - The company's primary sources of liquidity and capital are cash generated from operating activities, available cash and cash equivalents, and a revolving credit facility totaling €60 million[170] - As of March 31, 2023, the company's cash and cash equivalents amounted to €12.9 million[171] - As of March 31, 2023, the company was in compliance with all covenant terms of its revolving credit facility[172] Condensed Consolidated Cash Flow Data (Nine Months Ended March 31) | (€ thousand) | 2022 | 2023 | | :------------------------------------------ | :----- | :----- | | Net cash outflow from operating activities | 22,907 | (83,000) | | Net cash outflow from investing activities | (1,702) | (18,895) | | Net cash outflow from financing activities | (4,400) | (319) | - For the nine months ended March 31, 2023, net cash outflow from operating activities decreased by €105.9 million to €83.0 million, primarily due to a seasonal increase in inventory of €95.7 million[175] - For the nine months ended March 31, 2023, cash outflow from investing activities increased by €17.2 million to €18.9 million, primarily related to the new Leipzig warehouse in Germany[177] - For the nine months ended March 31, 2023, net cash outflow from financing activities decreased by €5.8 million, primarily due to the utilization of €4.9 million in bank borrowings from the revolving credit facility[178] QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section provides quantitative and qualitative disclosures about market risks, specifically addressing interest rate risk and foreign exchange risk Interest Rate Risk Interest rate fluctuations are not expected to materially impact operating results due to the short-term nature of the company's cash and cash equivalents - The fair value of the company's cash and cash equivalents is not significantly affected by increases or decreases in interest rates due to the short-term nature of these instruments[180] Foreign Exchange Risk Mytheresa Group faces foreign exchange risk from multi-currency revenue, mitigating it with hedging strategies for five major currencies, though not fully eliminating it - The company generates revenue in eight currencies, with most sales denominated in Euros, but also significant sales in US Dollars and British Pounds, making revenue susceptible to foreign exchange rate fluctuations[181] - To mitigate foreign exchange risk, the company hedges five major currencies, including USD and GBP, but hedging contracts typically have a term of less than one year and do not fully eliminate foreign exchange risk[182] Recent Accounting Pronouncements For a detailed discussion of recent accounting pronouncements, refer to the company's consolidated financial statements - For a detailed discussion of recent accounting pronouncements, refer to the company's consolidated financial statements[183] LEGAL PROCEEDINGS This section outlines the company's legal proceedings, asserting that no current litigation is expected to have a material adverse effect on its financial condition Legal Proceedings Overview The company is involved in routine legal proceedings and claims, but believes no current litigation will materially adversely affect its business or financial condition - The company is involved in legal proceedings and claims arising in the ordinary course of business from time to time[185] - The company believes there are currently no legal proceedings that, if determined adversely, would individually or in the aggregate have a material adverse effect on its business, operating results, cash flows, or financial condition[185]