00:00Coming off of a phenomenal earnings report, third straight consecutive quarter of positive positive EBITDA and more importantly, comp sales
00:08growth in the quarter, Michael, of about 7.6 percent and guidance going forward that suggests an acceleration, at least
00:16on a year to year basis in that growth, both in terms of the top line and the bottom line.
00:22How do you get there? Thanks for having me. And indeed, we published some great numbers and had very positive
00:30reactions.
00:31As you know, we we finished a big deal 12 months ago, acquiring the YNAB group.
00:37And I think you really have to go segment by segment.
00:41The MyTeresa business, double digit growth over last quarters continue to do so.
00:45We expect it continues to grow in the next fiscal year and clogs high profitability.
00:50The real difference is NetAporta and MistAporta, which in Q4 reported positive growth, 5.6 percent, positive EBITDA the first
01:00quarter since we acquired that it had top and bottom line positive.
01:04And we come we absolutely see that continuing.
01:08Our financial year ended in June.
01:09So we already have pretty good transparency and visibility on Q1, which goes from July to September.
01:15The momentum continues. So we will have on MyTeresa, double digit growth on NetAporta, high single digit growth.
01:24And then we have Ux, which is our off price business, which will have mid digital, mid digital, mid single
01:31digit growth.
01:32So that combined effect gives us high confidence.
01:35And with these numbers, we are at the moment an outlier in luxury industry.
01:39And I think that showed the reaction of the investor community.
01:43Well, give me a sense. So I mean, all three businesses are growing and they certainly look healthy.
01:47But I was looking at active customers.
01:49They were down about 6 percent at MyTeresa, 11 percent at NetAporta, and I think around the same amount at
01:55Mr. Porter.
01:55So give me a sense here as to what the customer mix is right now.
01:59If there are fewer active customers, I assume the ones you have must be spending more.
02:05Absolutely right. And I think that's a very important point to notice at the moment.
02:09We are in a very, very polarized market.
02:12The top top customers continue to spend massively.
02:16The middle class customers, for better words, are thinking twice to spend the money.
02:23There are inflationary pressures.
02:25And so it's not the total active customer number, which is around nine hundred thousand that we are concerned about.
02:31It's the top customer numbers.
02:33We have about 4.8 percent of our customers that account for 48 percent of the MyTeresa business.
02:40In NetAporta, it's 4.3 percent that account for 49 percent.
02:44This is roughly 35,000, 38,000 customers.
02:48That number needs to go up.
02:50And this is going up in the last quarter for MyTeresa.
02:53These customers grew by 18 percent and they spent more per capita.
02:58Same for NetAporta, nine percent higher spend per capita.
03:01This is how growth happens today in luxury.
03:04We are in a polarized market.
03:07It's at the top.
03:08And then, of course, at the discount end.
03:10The middle ground is the very risky ground.
03:13Well, let's get to an idea, though, of how durable the luxury market is.
03:17If we're starting to see fewer customers in this space, and I understand there is this threshold of customers that
03:22will always have the capacity to spend on these goods.
03:25But if we do reach a stage, I mean, we're talking on a day where interest rates are going up,
03:30cost pressures on everyone, both low income and high income, are changing dramatically.
03:35Do you worry at all, particularly with some of your long-term targets, that some of those cost pressures might
03:40actually catch up to the wealthiest out there?
03:44At the moment, there's no indication whatsoever.
03:47The reality is we are dealing with customers whose resilience, whose elasticity is not tested with inflation going up four
03:58or five points.
03:59Not at all.
03:59I mean, their wealth is, of course, dependent on the stock market, dependent on commodity, dependent on the real estate.
04:09So as long as that is in good shape, we are in good shape.
04:13And we have seen that over the last years, which, frankly, were not the best in macroeconomics.
04:19And still, we continue to grow.
04:22That customer is the most resilient one.
04:24I'm not saying they never feel it, but a lot must happen before these customers feel it.
04:30Talk to me broadly about kind of the state of the luxury e-commerce business.
04:35I understand you're doing well, but it's only a few quarters here.
04:38But this is coming in the wake of Farfetch collapsing.
04:41YNAP, which obviously you bought those assets, and a couple of matches, and a couple others that I'm forgetting.
04:48Why can this sort of newly reimagined Lux experience sort of buck that trend longer term?
04:54What are you doing differently than maybe those companies weren't able to do?
05:01Absolutely right.
05:02We have seen a lot of competitors going out of the market.
05:05It's a much more consolidated market.
05:07The key difference amongst, of course, many operational differences is we always focused on these top high-end customers.
05:15Farfetch, good example.
05:17It was a marketplace, very attractive to aspirational customers to find the one logo product.
05:22We have never focused on that.
05:24Our share of 50% sitting with just 4% is not only a remarkable KPI, but it's showing we
05:32are dealing with a different customer.
05:34We are dealing with customers that, for reasons of convenience, for reasons of efficiency, choose digital.
05:40But they're wealthy spenders, six-digit spenders a year.
05:44And that is not only a high-spending customer.
05:48It's a more profitable customer.
05:50We have much higher full-price share, so less discount with this customer.
05:55The average basket has reached around €900.
05:59So even increasing shipping costs because of fuel costs are, of course, less of a concern if the parcel you
06:07ship around has €900 merchandise value inside.
06:12So I understand the strategy, certainly with my Teresa, certainly with Mr. Porter, Annette Porter.
06:18But you have to kind of explain to me where Yooks fits all into this.
06:21Because you sold the outnet, which was also in the discount luxury, if you will.
06:27Yooks is in that same space.
06:28So why sell off the outnet and then make a bet on Yooks?
06:32Or is there maybe a plan that maybe Yooks does not fit longer term?
06:37So Yooks is a distinct business.
06:39You're absolutely right.
06:40I mean, we only have 3% customer overlap.
06:43It is part of the luxury sort of ecosystem by helping brands to solve overstock of older season.
06:51But it's a different business.
06:53The reason why we sold the outnet was Yooks was a massive turnaround.
06:58And to win the war, we wanted to reduce the battles.
07:02Yooks is more than double the size of the outnet.
07:06It has the leverage or cost leverage that we need to get there.
07:11It's not a strategic asset, different to Wiener, to Netta Porter and Mr. Porter.
07:16But in this polarized world, off-price luxury is highly popular.
07:22You can see it with many competitors.
07:24And so we clogged in the last quarter 23% growth in Europe with the Yooks business.
07:32And we focus on Europe because for off-price, with lower margin and with lower baskets, it doesn't make sense
07:38to ship overseas.
07:39But in Europe, there's a healthy core.
07:42We're growing it.
07:43We are treating it as an independent business.
07:45It will make money.
07:47But it's in the portfolio more for that than for strategic reasons.
07:51Let's talk about the geography of the overall business.
07:54The U.S. is doing great.
07:56It's actually been a bright spot.
07:57A lot of growth there.
07:58Do you worry at all, given the tariff situation, the geopolitical situations, and some of the other things,
08:06could potentially impede some of the transactions that actually occur from U.S.-based buyers?
08:13You're absolutely right.
08:14At the moment, U.S. is probably the best luxury market in the world.
08:19MyTeresa grew 39% in the last quarter.
08:23Also for Netaporta, Mr. Porter was the highest gross geography.
08:28We have seen a lot of headwinds.
08:31The tariff situation is not new.
08:34I mean, it started last year, and it's fully reflected in our results.
08:38But, of course, we never know how long these cycles continue.
08:43And that's also always, to keep in mind, a big advantage of our business.
08:48We are much more diversified.
08:50We ship to 170 countries' territories.
08:54If a region is not as booming anymore, we shift our marketing resources to another region.
09:00We have no fixed assets.
09:01We don't have a store network that now in Asia has the issue of less footfall.
09:07We moved our marketing dollars to the booming U.S. market.
09:10I don't see signs of a decline, but it's also fully possible for us to mitigate, as long as there's
09:18growth in the world, Arabic Peninsula, maybe that comes back after the crisis.
09:24So we are in a much more flexible situation than classic physical luxury players.
09:32And my final question, too, just kind of has to deal with some of the technology changes, particularly the use
09:37of AI in shopping and, more importantly, finding products and then actually purchasing those products.
09:45Bain just put out an interesting report kind of talking about we're starting to reach an inflection point where we
09:50can see AI tools somehow involved in the process of at least 50 percent of consumer discretionary purchases.
09:57Are you integrating AI tools into your own functionality?
10:02And if so, what is the interaction that you're having right now with the customer?
10:07You're absolutely right.
10:08It's definitely a new S-curve in interfaces.
10:13We really use and look at AI as more efficient, more frictionless interface to the customer.
10:21It's on the search side.
10:23So it's really we taught customers for years how to search by saying shoe size 47 red, talking like a
10:31catalog.
10:31That's not a natural way to shop.
10:33So we we want to be able to understand I'm looking for a dress for a wedding and give relevant
10:40suggestions.
10:41We are developing these tools.
10:44They need to get better.
10:45It's very important that, of course, we really embed into these tools our knowledge, our know-how.
10:54We have people that understand what's hot the next season.
10:57And so in search, in making suggestions for full looks, that's all where we look to AI in addition to,
11:04of course, efficiency gains in asset production, be it video or be it imagery.
11:10It's early on luxury has high standards of quality.
11:15So good is not good enough.
11:17It must be very good.
11:19But we agree with what you said and what Bain says.
11:23There is an increasing adoption rate because we are serving customer that look for convenience and efficiency.
11:29That's why they are digital.
11:30That's why they are online.
11:31And so they are also interested in any further improvement to make it easier and faster to find what they're
11:37looking for.
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