MYTHERESA(MYTE) - 2024 Q2 - Quarterly Report

Financial Results and Key Operating Metrics Key Metrics Summary For the six months ended December 31, 2023, the company saw GMV increase to €423.2 million and net sales to €384.8 million, but profitability significantly declined with gross profit falling by 7.2% and Adjusted EBITDA decreasing by 76.7% to €7.1 million | Metric | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Gross Merchandise Value (GMV) | €413.7 million | €423.2 million | 2.3% | | Active Customers (LTM) | 814 thousand | 856 thousand | 5.1% | | Total Orders Shipped (LTM) | 1,876 thousand | 2,037 thousand | 8.6% | | Net Sales | €366.0 million | €384.8 million | 5.1% | | Gross Profit | €192.0 million | €178.1 million | (7.2%) | | Gross Profit Margin | 52.5% | 46.3% | (620 basis points) | | Operating Income (Loss) | €2.6 million | €(17.5) million | (764.3%) | | Net Loss | €(4.3) million | €(17.3) million | 304.8% | | Adjusted EBITDA | €30.4 million | €7.1 million | (76.7%) | | Adjusted EBITDA Margin | 8.3% | 1.8% | (650 basis points) | Reconciliation of Non-IFRS Measures The company provides reconciliations for non-IFRS measures to their closest IFRS equivalents, with the net loss of €17.3 million for the six months ended December 31, 2023, adjusted to an Adjusted Net Income of €0.1 million Reconciliation of Net Loss to Adjusted EBITDA (Six Months Ended) | (in € millions) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Net loss | €(4.3) | €(17.3) | | Finance costs, net | €0.8 | €2.2 | | Income tax expense (benefit) | €6.1 | €(2.5) | | Depreciation and amortization | €5.3 | €7.2 | | EBITDA | €8.0 | €(10.3) | | Other transaction-related, certain legal and other expenses | €3.2 | €6.1 | | Share-based compensation | €19.2 | €11.3 | | Adjusted EBITDA | €30.4 | €7.1 | Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) (Six Months Ended) | (in € millions) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Operating Income (Loss) | €2.6 | €(17.5) | | Other transaction-related, certain legal and other expenses | €3.2 | €6.1 | | Share-based compensation | €19.2 | €11.3 | | Adjusted Operating Income (Loss) | €25.1 | €(0.2) | Reconciliation of Net Loss to Adjusted Net Income (Six Months Ended) | (in € millions) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Net loss | €(4.3) | €(17.3) | | Other transaction-related, certain legal and other expenses | €3.2 | €6.1 | | Share-based compensation | €19.2 | €11.3 | | Adjusted Net Income | €18.2 | €0.1 | Unaudited Interim Condensed Consolidated Financial Statements Statements of Profit and Comprehensive Income For the six months ended December 31, 2023, net sales increased to €384.8 million, but a higher cost of sales led to a decrease in gross profit to €178.1 million, resulting in an operating loss of €17.5 million and a net loss of €17.3 million Consolidated Statement of Profit (Six Months Ended) | (in € thousands) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Net sales | 365,983 | 384,807 | | Gross profit | 191,963 | 178,134 | | Operating income (loss) | 2,640 | (17,538) | | Net loss | (4,268) | (17,276) | | Basic & diluted earnings per share | €(0.05) | €(0.20) | Statements of Financial Position As of December 31, 2023, total assets increased to €720.1 million, primarily driven by a rise in inventories, while total liabilities also increased to €278.8 million and total shareholders' equity slightly decreased to €441.3 million Consolidated Statement of Financial Position | (in € thousands) | June 30, 2023 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Inventories | 360,262 | 409,995 | | Cash and cash equivalents | 30,136 | 6,437 | | Total assets | 693,971 | 720,068 | | Liabilities & Equity | | | | Trade and other payables | 71,085 | 103,277 | | Total liabilities | 246,541 | 278,752 | | Total shareholders' equity | 447,430 | 441,317 | Statements of Changes in Equity For the six months ended December 31, 2023, total shareholders' equity decreased by €6.1 million to €441.3 million, primarily due to a net loss partially offset by share-based compensation - Total shareholders' equity decreased from €447.4 million on July 1, 2023, to €441.3 million on December 31, 2023[26] - The decrease was driven by a net loss of €17.3 million, which was partly offset by €11.3 million recognized for share-based compensation[26] Statements of Cash Flows For the six months ended December 31, 2023, net cash used in operating activities significantly improved to €14.8 million, while cash and cash equivalents at period-end fell to €6.4 million Consolidated Statement of Cash Flows (Six Months Ended) | (in € thousands) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | (46,952) | (14,770) | | Net cash (used in) investing activities | (12,396) | (4,551) | | Net cash inflow (outflow) from financing activities | (2,190) | (4,316) | | Net decrease in cash and cash equivalents | (61,538) | (23,638) | | Cash and cash equivalents at end of the period | 51,880 | 6,437 | Notes to the Financial Statements The notes provide detailed information supporting the financial statements, covering accounting policies, segment performance, geographical sales, goodwill impairment testing, share-based compensation, and financial risk management Note 2: Basis of Preparation The financial statements are prepared on a going concern basis, with management confident in securing new financing and implementing mitigating actions to ensure sufficient liquidity for the next twelve months - The company is in the final steps of securing a syndicated loan agreement, expected to be signed in March 2024, which will replace the existing Revolving Credit Facilities[38] - Existing Revolving Credit Facilities were increased from €60 million to €90 million, with €85.1 million un-utilized as of December 31, 2023[37] - Management has identified mitigating actions, including selling excess inventory, to optimize cash flow and liquidity if needed, concluding there are no material uncertainties regarding the going concern assumption[41] Note 6: Segment Information The Online segment is the primary driver of the business, accounting for €377.1 million in net sales for the six months ended December 31, 2023, significantly outweighing the Retail Stores segment Segment Performance (Six Months Ended Dec 31, 2023) | (in € thousands) | Online | Retail Stores | Total | | :--- | :--- | :--- | :--- | | Net Sales | 377,136 | 7,671 | 384,807 | | Segment EBITDA | 12,003 | 2,599 | 14,603 | Segment Performance (Six Months Ended Dec 31, 2022) | (in € thousands) | Online | Retail Stores | Total | | :--- | :--- | :--- | :--- | | Net Sales | 357,653 | 8,330 | 365,983 | | Segment EBITDA | 35,997 | 3,235 | 39,232 | Note 7: Net Sales and Geographic Information For the six months ended December 31, 2023, Europe (excluding Germany) remained the largest market, while the United States showed strong growth, becoming the second-largest market Net Sales by Geographic Location (Six Months Ended) | Region | 2022 Net Sales (€k) | 2022 % | 2023 Net Sales (€k) | 2023 % | | :--- | :--- | :--- | :--- | :--- | | Germany | 62,649 | 17.1% | 62,071 | 16.1% | | United States | 61,470 | 16.8% | 75,393 | 19.6% | | Europe (ex-Germany) | 141,907 | 38.8% | 152,186 | 39.5% | | Rest of the world | 99,957 | 27.3% | 95,158 | 24.7% | | Total | 365,983 | 100.0% | 384,807 | 100.0% | Note 11: Intangible Assets and Goodwill The company performed a goodwill impairment test as of December 31, 2023, recognizing no impairment loss for either CGU, though the headroom for the Online CGU was lower than in the prior period - An impairment test was carried out as of December 31, 2023, due to internal and external factors, including market uncertainty and share price declines[87] - The estimated recoverable amount of the online CGU exceeded its carrying amount by more than 10%, while the retail store CGU exceeded its carrying amount by more than 71%; no impairment was recorded[89] - The headroom for the Online CGU was lower as of December 31, 2023, compared to June 30, 2023, due to changes in judgments and assumptions[90] Note 14: Share-Based Compensation The company recognized €11.3 million in share-based compensation expense for the six months ended December 31, 2023, with new LTI awards granted to key management tied to service and performance conditions Share-Based Compensation Expense Recognized | (in € thousands) | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Total Expense | 19,226 | 11,336 | - As of July 1, 2023, new LTI awards were granted, including 3,113,125 RSUs and 2,923,280 stock options to key management, with vesting over three years based on time and performance metrics like GMV growth and adjusted EBITDA margin[109][111] - An Employee Share Purchase Program (ESPP) was launched on May 29, 2023, resulting in the issuance of 29,641 shares[115] Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Mytheresa operates as a leading global luxury e-commerce platform, with its performance in the first half of fiscal year 2024 impacted by ongoing global economic uncertainties, inflationary pressures, and geopolitical factors - Mytheresa is a leading luxury e-commerce platform shipping to over 130 countries, offering products from over 200 luxury brands[136] - The company's business activities and future sales may be impacted by global economic uncertainties, exacerbated by wars and other geopolitical factors[137] - The negative effects of these economic uncertainties were visible in the results for the three and six months ended December 31, 2023, and are expected to continue or potentially increase[139] Factors Affecting our Performance The company's performance is influenced by macroeconomic trends, brand relationships, online luxury penetration, category expansion, inventory management, and strategic infrastructure investments - Overall economic trends, including inflation and recession, have a significant impact on consumer spending and the company's business[155] - Growth is dependent on maintaining relationships with top luxury brands and capitalizing on the expected increase in online penetration of luxury goods, projected to reach 33% by 2025[157][158] - Strategic initiatives include expanding into Men's, Kidswear, and Life categories, and leveraging the Curated Platform Model (CPM) to improve capital efficiency and product access[160][163] Results of Operations For the six months ended December 31, 2023, net sales grew 5.1% to €384.8 million, but gross profit declined 7.2% to €178.1 million due to margin pressures, leading to an operating loss of €17.5 million - GMV increased by 2.3% for the six months ended Dec 31, 2023, driven by active customer growth but tempered by negative economic trends[177] - Gross profit margin for the six months ended Dec 31, 2023 decreased by 620 basis points, primarily due to promotion-driven margin slippage, an exceptional provision for inventory depreciation, and financial effects from brand mix[181] - Marketing expenses as a percentage of GMV decreased for the six months ended Dec 31, 2023, as the company reduced promotional activity and focused on top customer acquisition and retention[186] - Adjusted SG&A expenses as a percentage of GMV increased from 13.1% to 15.0% for the six months ended Dec 31, 2023, due to higher personnel, travel, and energy costs[192] Liquidity and Capital Resources The company's liquidity is primarily sourced from cash from operations and Revolving Credit Facilities, with a new syndicated loan expected in March 2024 to replace current facilities, ensuring sufficient resources for the next twelve months - As of December 31, 2023, cash and cash equivalents amounted to €6.4 million[201] - The company's Revolving Credit Facilities were increased from €60 million to €90 million, and a new syndicated loan is expected to be signed in March 2024[203][204] Consolidated Statement of Cash Flow Data (Six Months Ended) | (in € thousands) | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Net cash outflow from operating activities | (46,952) | (14,770) | | Net cash outflow from investing activities | (12,396) | (4,551) | | Net cash outflow from financing activities | (2,190) | (4,316) | Quantitative and Qualitative Disclosures About Market Risk Market Risk The company's primary market risk is foreign exchange exposure from significant U.S. Dollar and Pound Sterling sales versus Euro-denominated costs, which is partially mitigated through hedging contracts - The company faces foreign exchange risk due to significant sales denominated in U.S. Dollars and Pound Sterling, while approximately 90% of purchases are in Euros[218] - To reduce foreign currency exposure, the company hedges its risk in five major currencies, with contracts typically having a duration of less than one year[219] - Interest rate risk is not expected to have a material impact on the company's results of operations[217] Legal Proceedings Legal Proceedings Summary The company is involved in ordinary course legal proceedings, none of which are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently party to any legal proceedings which are expected to have a material adverse effect on its business, operating results, cash flows or financial condition[222]