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MYT Netherlands Parent BV (MYTE)

Filed: 16 Feb 22, 6:00am

Exhibit 99.1

 

INTERIM REPORT

 

For the three and six months ended December 31, 2021

 

MYT Netherlands Parent B.V.

Einsteinring 9

85609 Aschheim/Munich

Germany

 

 

 

 

INDEX

 

FINANCIAL RESULTS AND KEY OPERATING METRICS3
  
UNAUDITED INTERIM CONDENSED CONSOLIDATED Financial Statements6
  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS25
  
Quantitative and Qualitative Disclosures about Market Risk42
  
Legal Proceedings42

 

 

 

 

MYT Netherlands Parent B.V.

 

Financial Results and Key Operating Metrics

(Amounts in € millions)

 

We review a number of operating and financial metrics, including the following business and non-IFRS metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

 

We present Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe these measures are helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of our ongoing operations and performance.

 

Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income have limitations, because they exclude certain types of expenses. Furthermore, other companies in our industry may calculate similarly titled measures differently than we do, limiting their usefulness as comparative measures.

 

We use Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income as additional information only. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for additional analysis.

 

  Three Months Ended Six Months Ended
(in millions) (unaudited) December 31,
2020
 December 31,
2021
 Change
in % / BPs
 December 31,
2020
 December 31,
2021
 Change
in % / BPs
Gross Merchandise Value (GMV) (1) € 158.6 € 200.2 26.2% € 285.0 € 364.0 27.8%
Active customer (LTM in thousands) (1), (2) 569 740 30.2% 569 740 30.2%
Total orders shipped  (LTM in thousands) (1), (2) 1,256 1,656 31.8% 1,256 1,656 31.8%
Net sales € 158.6 € 187.6 18.3% € 285.0 € 345.4 21.2%
Gross profit € 78.6 € 100.1 27.4% € 137.3 € 177.4 29.3%
Gross profit margin(3) 49.5% 53.4% 390 BPs 48.2% 51.4% 320 BPs
Adjusted EBITDA(4) € 22.1 € 28.3 27.8% € 32.6 € 42.3 29.9%
Adjusted EBITDA margin(3) 14.0% 15.1% 110 BPs 11.4% 12.3% 90 BPs
Adjusted Operating Income(4) € 20.1 € 26.0 29.6% € 28.5 € 37.9 32.9%
Adjusted Operating Income margin(3) 12.7% 13.9% 120 BPs 10.0% 11.0% 100 BPs
Adjusted Net Income(4) € 14.8 € 18.9 27.3% € 20.1 € 27.1 35.2%
Adjusted Net Income margin(3) 9.3% 10.1% 80 BPs 7.0% 7.8% 80 BPs

 

(1)Definition of GMV, Active customer and Total orders shipped can be found on page 29.

(2)Active customers and total orders shipped are calculated based on orders shipped from our sites during the last twelve months (LTM) ended on the last day of the period presented.

(3)As a percentage of net sales.

(4)EBITDA, adjusted EBITDA, adjusted Operating Income, adjusted net income are measures not defined under IFRS. For further information about how we calculate these measures and limitations of its use, see page 4 and 5.

 

 

 

MYT Netherlands Parent B.V.

 

Financial Results and Key Operating Metrics

(Amounts in € millions)

 

The following tables set forth the reconciliations of net income to EBITDA and adjusted EBITDA, operating income to adjusted operating income and net income to adjusted net income:

 

  Three Months Ended Six Months Ended
(in millions) (unaudited) December 31,
2020
 December 31,
2021
 Change
in %
 December 31,
2020
 December 31,
2021
 Change
in %
Net income € 15.7 € 2.1 (86.9%) € 25.4 € (5.2) (120.6%)
Finance expenses, net € (5.0) € 0.2 (104.0%) € (10.2) € 0.4 (103.8%)
Income tax expense € 5.9 € 7.0 19.0% € 9.6 € 10.4 7.9%
Depreciation and amortization € 2.0 € 2.3 10.5% € 4.1 € 4.4 9.2%
thereof depreciation of right- of use assets € 1.3 € 1.4 6.0% € 2.6 € 2.7 4.4%
EBITDA € 18.7 € 11.5 (38.3%) € 28.9 € 10.0 (65.4%)
IPO preparation and transaction costs(1) € 3.5 € 0.0 (100.0%) € 3.7 € 0.0 (100.0%)
Other transaction-related costs(2) € 0.0 € 1.0 N/A € 0.0 € 1.0 N/A
IPO related share-based compensation(3) € 0.0 € 15.7 N/A € 0.0 € 31.3 N/A
Adjusted EBITDA € 22.1 € 28.3 27.8% € 32.6 € 42.3 29.9%

 

  Three Months Ended Six Months Ended
(in millions) (unaudited) December 31,
2020
 December 31,
2021
 Change
in %
 December 31,
2020
 December 31,
2021
 Change
in %
Operating Income € 16.6 € 9.2 (44.3%) € 24.8 € 5.5 (77.7%)
IPO preparation and transaction costs(1) € 3.5 € 0.0 (100.0%) € 3.7 € 0.0 (100.0%)
Other transaction-related costs(2) € 0.0 € 1.0 N/A € 0.0 € 1.0 N/A
IPO related share-based compensation(3) € 0.0 € 15.7 N/A € 0.0 € 31.3 N/A
Adjusted Operating Income € 20.1 € 26.0 29.6% € 28.5 € 37.9 32.9%

 

 

 

MYT Netherlands Parent B.V.

 

Financial Results and Key Operating Metrics

(Amounts in € millions)

 

  Three Months Ended Six Months Ended
(in millions) (unaudited) December 31,
2020
 December 31,
2021
 Change
in %
 December 31,
2020
 December 31,
2021
 Change
in %
Net Income € 15.7 € 2.1 (86.9%) € 25.4 € (5.2) (120.6%)
IPO preparation and transaction costs(1) € 3.5 € 0.0 (100.0%) € 3.7 € 0.0 (100.0%)
Other transaction-related costs(2) € 0.0 € 1.0 N/A € 0.0 € 1.0 N/A
IPO related share-based compensation(3) € 0.0 € 15.7 N/A € 0.0 € 31.3 N/A
Finance expenses on shareholder loans(4) € (5.3) € 0.0 (100.0%) € (10.9) € 0.0 (100.0%)
Income tax effect(5) € 0.9 € 0.0 (100.0%) € 1.9 € 0.0 (100.0%)
Adjusted Net Income € 14.8 € 18.9 27.3% € 20.1 € 27.1 35.2%

 

(1)Represents non-recurring professional fees, including consulting, legal and accounting fees, related to our initial public offering, which are classified within selling, general and administrative expenses.

(2)Other transaction-related costs represents non-recurring professional fees, including advisory and accounting fees, related to potential transactions.

(3)In fiscal 2021, with the effective IPO, certain key management personnel received a one-time granted share-based compensation, for which the share-based compensation expense will be recognized upon defined vesting schedules in the future periods, including €31.2 million for the six months ended December 31, 2021. We do not consider these expenses to be indicative of our core operating performance.

(4)Our Adjusted Net Income excludes finance income (expenses) associated with our Shareholder Loans, which we do not consider to be indicative of our core performance. We did not receive any cash proceeds under the Shareholder Loans, which originated as part of the Neiman Marcus acquisition in 2014. In January 2021, we repaid our Shareholder Loans (principal plus outstanding interest) using a portion of the net proceeds from our initial public offering.

(5)Reflects adjustments to historical income tax expense to reflect changes in taxable income for each of the periods presented due to changes in finance expenses related to the Shareholder Loans, assuming a statutory tax rate of 27.8%.

 

 

 

MYT NETHERLANDS PARENT B.V. – UNAUDITED CONDENSED CONSOLIDATED

 

INTERIM FINANICAL STATEMENTS

 

INDEXPage
  
Unaudited Condensed Consolidated Statements of Profit and Comprehensive Income7
  
Unaudited Condensed Consolidated Statements of Financial Position8
  
Unaudited Condensed  Consolidated Statements of Changes in Equity9
  
Unaudited Condensed Consolidated Statements of Cash Flows10
  
Notes to the Interim Condensed Consolidated Financial Statements11

 

 

 

MYT Netherlands Parent B.V.

 

Unaudited Condensed Consolidated Statements of Profit and Comprehensive Income

(Amounts in € thousands, except share and per share data)

 

     Three Months Ended  Six Months Ended 
(in € thousands) Note  December 31,
2020
  December 31,
2021
  December 31,
2020
  December 31,
2021
 
Net sales  7   158,593   187,571   284,952   345,402 
Cost of sales, exclusive of depreciation and amortization  8   (80,023)  (87,453)  (147,701)  (167,969)
Gross profit      78,570   100,118   137,251   177,433 
Shipping and payment cost      (17,833)  (25,509)  (32,666)  (45,476)
Marketing expenses      (19,696)  (23,828)  (37,137)  (46,256)
Selling, general and administrative expenses      (22,104)  (40,980)  (37,660)  (77,138)
Depreciation and amortization      (2,046)  (2,261)  (4,067)  (4,443)
Other expense (income), net      (276)  1,708   (897)  1,427 
Operating income      16,615   9,246   24,824   5,547 
Finance income      7,952   0   16,243   0 
Finance costs      (2,976)  (199)  (6,085)  (388)
Finance income (costs), net  9   4,975   (199)  10,157   (388)
Income (loss) before income taxes      21,590   9,048   34,981   5,159 
Income tax expense  10   (5,866)  (6,982)  (9,627)  (10,390)
Net income (loss)      15,724   2,066   25,354   (5,230)
Cash Flow Hedge      78   (1,088)  949   (2,169)
Income Taxes related to Cash Flow Hedge      11   336   (231)  604 
Foreign currency translation      -   (28)  -   (54)
Other comprehensive income (loss)      89   (780)  718   (1,619)
Comprehensive income (loss)      15,813   1,287   26,072   (6,849)
                     
Basic & diluted earnings per share     0.22  0.02   0.36  (0.06)
Weighted average ordinary shares outstanding (basic) - in millions      70.2   86.3   70.2   86.3 
Weighted average ordinary shares outstanding (diluted) - in millions      70.2   87.7   70.2   88.0 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 

 

MYT Netherlands Parent B.V.

 

Unaudited Condensed Consolidated Statements of Financial Position

(Amounts in € thousands)

 

(in € thousands) Note  June 30, 2021  December 31, 2021 
Assets            
Non-current assets            
Intangible assets and goodwill      155,611   155,353 
Property and equipment      8,810   8,411 
Right-of-use assets  11   14,009   21,328 
Total non-current assets      178,430   185,091 
Current assets            
Inventories      247,054   244,312 
Trade and other receivables  12   5,030   41,814 
Other assets      14,667   17,535 
Cash and cash equivalents      76,760   79,745 
Total current assets      343,510   383,406 
Total assets      521,941   568,497 
             
Shareholders’ equity and liabilities            
Subscribed capital      1   1 
Capital reserve  13   444,951   477,424 
Accumulated Deficit      (60,837)  (66,067)
Accumulated other comprehensive income  14   1,602   (17)
Total shareholders’ equity      385,718   411,342 
             
Non-current liabilities            
Provisions      717   742 
Lease liabilities  11   8,786   16,063 
Deferred tax liabilities      2,308   4,806 
Total non-current liabilities      11,811   21,611 
Current liabilities            
Tax liabilities      14,293   19,906 
Lease liabilities  11   5,361   5,443 
Contract liabilities      10,975   8,314 
Trade and other payables      43,558   39,170 
Other liabilities      50,225   62,711 
Total current liabilities      124,412   135,544 
Total liabilities      136,223   157,156 
Total shareholders’ equity and liabilities      521,941   568,497 

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

 

MYT Netherlands Parent B.V.

 

Unaudited Condensed Consolidated Statements of Changes in Equity

(Amounts in € thousands)

 

(in € thousands) Subscribed
capital
  Capital
reserve
  Accumulated
deficit
  Hedging
reserve
  Foreign
currency
translation
reserve
  Total
shareholders’
equity
 
Balance as of July 1, 2020  1   91,008   (28,234)  -   1,602   64,377 
Net income  -   -   25,354   -   -   25,354 
Other comprehensive income  -   -   -   718   -   718 
Comprehensive income  -   -   25,354   718   -   26,072 
Share-based compensation  -   14       -       14 
Balance as of December 31, 2020  1   91,022   (2,880)  718   1,602   90,463 
                         
Balance as of July 1, 2021  1   444,951   (60,837)  -   1,602   385,718 
Net income  -   -   (5,230)  -   -   (5,230)
Other comprehensive income  -   -   -   (1,566)  (53)  (1,619)
Comprehensive income  -   -   (5,230)  (1,566)  (53)  (6,849)
Share-based compensation  -   32,473   -   -   -   32,473 
Balance as of December 31, 2021  1   477,424   (66,067)  (1,566)  1,549   411,342 

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

 

MYT Netherlands Parent B.V.

 

Unaudited Condensed Consolidated Statements of Cash Flows

(Amounts in € thousands)

 

     Six months ended December 31, 
(in € thousands) Note  2020  2021 
Net income (loss)      25,354   (5,230)
Adjustments for            
   Depreciation and amortization      4,067   4,443 
   Finance (income) costs, net      (10,157)  388 
   Share-based compensation      14   32,473 
   Income tax expense      9,627   10,390 
Change in operating assets and liabilities            
   Increase (decrease) in provisions      124   25 
   (Increase) decrease in inventories      (62,837)  2,741 
   (Increase) decrease in trade and other receivables  12   (1,197)  (36,785)
   Decrease (increase) in other assets      1,955   (2,817)
   (Decrease) increase in other liabilities      2,968   10,267 
   Increase (decrease) in contract liabilities      (734)  (2,661)
   Increase (decrease) in trade and other payables      2,550   (4,387)
Income taxes paid      (1,102)  (1,674)
Net cash provided by (used in) operating activities      (29,368)  7,172 
Expenditure for property and equipment and intangible assets      (1,363)  (1,057)
Proceeds from sale of property and equipment and intangible assets      44   - 
Net cash (used in) investing activities      (1,319)  (1,057)
Interest paid      (3,962)  (388)
Proceeds from bank liabilities      64,990   - 
Repayment of liabilities from banks      (29,000)  - 
Repayment of Shareholder loans      (2,411)  - 
Payment of lease liabilities      (3,047)  (2,689)
Net cash (used in) provided by financing activities      26,570   (3,076)
Net increase (decrease) in cash and cash equivalents      (4,118)  3,038 
Cash and cash equivalents at the beginning of the period      9,367   76,760 
Effects of exchange rate changes on cash and cash equivalents      (18)  (53)
Cash and cash equivalents at end of the period      5,231   79,745 

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

10 

 

 

1.Corporate information

 

MYT Netherlands Parent B.V. (the “Company”, together with its subsidiaries, “Mytheresa Group”) is a public company with limited liability, incorporated by MYT Holding LLC under the laws of the Netherlands on May 31, 2019. The statutory seat of the Company is in Amsterdam, the Netherlands. The registered office address of the Company is at Einsteinring 9, 85609 Aschheim, Germany. The Company is registered at the trade register of the German Chamber of Commerce under number 261084.

 

The Company is a holding company. Through its subsidiary Mytheresa Group GmbH (“MGG”), Mytheresa Group operates a digital platform for the global luxury fashion consumer, in addition to its flagship retail store and men’s location in Munich. Mytheresa Group started as one of the first multi-brand luxury boutiques in Germany and launched its online business in 2006. Mytheresa Group provides customers a highly curated selection of products, access to exclusive capsule collections, engaging content, memorable service and a unique digital shopping experience.

 

As of December 31, 2021, MYT Holding LLC, USA held 78.6% shares based on issued shares, of MYT Netherlands Parent B.V. The ultimate parent of MYT Holding LLC, USA is MYT Ultimate Parent LLC, USA as of December 31, 2021.

 

The interim consolidated financial statements of Mytheresa Group were authorized for issue by the Management Board on February 9, 2022.

 

2.Basis of preparation

 

These interim condensed consolidated financial statements as of and for the six months ended December 31, 2020 and 2021 were prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’, as issued by the International Accounting Standards Board (“IASB”). The interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements for fiscal 2021, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB, taking into account the recommendations of the International Financial Reporting Standards Interpretations Committee (“IFRIC”).

 

Mytheresa Group’s fiscal year ends June 30. All intercompany transactions are eliminated during the preparation of the interim condensed consolidated financial statements.

 

The interim condensed consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated. The interim condensed consolidated financial statements are presented in Euro (“€”), which is Mytheresa Group’s functional currency. All amounts are rounded to the nearest thousands, except when otherwise indicated. Due to rounding, differences may arise when individual amounts or percentages are added together.

 

The interim condensed consolidated financial statements are prepared under the assumption that the business will continue as a going concern. Management believes that Mytheresa Group has adequate resources to continue operations for the foreseeable future.

 

Fluctuations in the results of operations for the six months ended December 31, 2020 and 2021 may be related to seasonality in Mytheresa Group’s business, such as shifts in overall sale seasons. Seasonality in Mytheresa Group’s business thus does not follow that of traditional retailers, such as typical concentration of net sales in the holiday quarter since the business is worldwide.

 

11 

 

 

3.Impacts to the consolidated financial statements due to Covid-19 pandemic and inflation risks

 

Although the persistent COVID-19 pandemic has had a substantial impact on the global economy, Mytheresa Group has not yet experienced material declines in revenue, deterioration in net assets, or other adverse effects from the pandemic.

 

To date, Mytheresa Group has incurred no significant supply chain or logistics disruptions with its brand partners, shipping providers, or our in-house operations and also no significant adverse effect of inflation. In response to the pandemic and in coordination with local government requirements, Mytheresa Group temporarily closed certain corporate and administrative offices in fiscal year 2020 and 2021, including its corporate headquarters in Munich, with affected employees working remotely. These closures were limited to administrative offices and retail stores, with its warehouse and logistics functions remaining in operation throughout the pandemic.

 

Mytheresa Group also implemented safe work and social distancing measures for all employees, including personnel in its central warehouse facility in Heimstetten, Germany. Due to government restrictions to contain the coronavirus, Mytheresa stores had to close from mid-December 2020 to end of February 2021, and when the stores reopened in fiscal year 2021 there were restrictions on the total number of customers allowed in the stores. Short-term work allowance has been applied to store employees for the same period. In fiscal 2022 and as of this reporting date, Mytheresa Group has not been impacted negatively from the COVID-19 pandemic.

 

The COVID-19 pandemic remains an evolving situation. Uncertainties in the global economy may adversely impact the Mytheresa Group’s brand partners, customers, and other business partners and availability of our workforce, which may interrupt its supply chain, impact future sales, and require other changes to our operations. With a global or regional recovery from the COVID-19 pandemic, the Mytheresa Group online shops may suffer from reduced online demand and therefore slower revenue growth. These uncertainties may also lead to increased asset recovery and valuation risks, such as potential impairment of goodwill and intangible assets and inventories. However, management does not currently anticipate any long-term adverse effects from the pandemic. Overall inflation will be reflected in customer price increases, as the Mytheresa Group takes expected increases in recommended retail prices from its suppliers into consideration when determining its own price increases. Overall, demand for luxury products worldwide has been less effected by demand shifts due to inflation than other industries. Mytheresa Group’s forecast remains positive both mid and long-term for our store and online operations. Management will continue to closely monitor the effects of the pandemic, including its impact on inventories and other significant estimates.

 

4.Significant accounting policies

 

The accounting policies applied by Mytheresa Group in these interim condensed consolidated financial statements are the same as those applied by Mytheresa Group in its consolidated financial statements for fiscal 2021, except for:

 

Revenue recognition

 

Mytheresa Group generates revenue primarily from the sale of merchandise shipped to customers. Mytheresa introduced the Curated Platform Model (CPM), whereby it recognizes commission revenue for the rendering of services.

 

Retail sales

 

Mytheresa acts as a principal and sells merchandise through their online website as well as physical stores. Revenue is recognized when control of the goods is transferred to the customer, which occurs upon delivery to the customer. The accounting policies for such revenue are the same as described in the Annual Report on Form 20-F for fiscal 2021.

 

12 

 

 

Commission sales

 

This revenue is related to the Curated Platform Model (CPM), which provides sellers (brand partners) the ability to sell their goods to customers on the Mytheresa platform. In this case, Mytheresa generates a commission fee (normally a percentage of the selling price), which is based on agreements with brand partners. Mytheresa’s performance obligation with respect to these transactions is to arrange the transaction through its online platform and to provide related services; however, the Group does not have any discretion in setting the price of the goods to be sold, nor does it bear any of the inventory risk for the goods to be shipped to the customer. As such, the Group is considered to be an agent in these transactions and recognizes revenue on a net basis for the agreed upon commission at the point in time when the goods are delivered to the end customer.

 

The policy for recognizing and measuring income taxes in the interim period is described in Note 10.

 

5.Critical accounting judgments and key estimates and assumptions

 

The preparation of Mytheresa Group’s interim condensed consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of net sales, expenses, assets and liabilities, and the accompanying note disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The estimates and underlying assumptions are subject to continuous review.

 

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 were the same as those that applied to the consolidated financial statements for fiscal 2021.

 

13 

 

 

6.Segment and geographic information

 

In line with the management approach, the operating segments were identified on the basis of Mytheresa Group’s internal reporting and how our chief operating decision maker (CODM), assesses the performance of the business. Mytheresa Group collectively identifies its Chief Executive Officer and Chief Financial Officer as the CODM. On this basis, Mytheresa Group identifies its online operations and retail store as separate operating segments. Segment EBITDA is used to measure performance, because management believes that this information is the most relevant in evaluating the respective segments relative to other entities that operate in the retail business.

 

Segment EBITDA is defined as operating income excluding depreciation and amortization.

 

Assets are not allocated to the different business segments for internal reporting purposes.

 

The following is a reconciliation of the Company’s segment EBITDA to consolidated net income.

 

  Three months ended December 31, 2020 
(in € thousands) Online  Retail Stores  Segments total  Reconciliation(1)  IFRS
consolidated
 
Net Sales  156,171   2,422   158,593   -   158,593 
EBITDA  22,401   364   22,764   (4,103)  18,661 
Depreciation and amortization                  (2,046)
Finance expenses, net                  4,975 
Income tax expense                  (5,866)
Net income                  15,724 

 

  Six months ended December 31, 2020 
(in € thousands) Online  Retail Stores  Segments total  Reconciliation(1)  IFRS
consolidated
 
Net Sales  279,459   5,493   284,952   -   284,952 
EBITDA  32,229   1,031   33,259   (4,368)  28,891 
Depreciation and amortization                  (4,067)
Finance expenses, net                  10,157 
Income tax expense                  (9,628)
Net income                  25,354 

 

 

(1)Reconciliation relates to corporate administrative expenses, which have not been allocated to the online operations or the retail store, including €3,475 thousand and €3,676 thousand related to IPO preparation and transaction costs during the three months ended and six months ended December 31, 2020.

 

14 

 

 

  Three months ended December 31, 2021 
(in € thousands) Online  Retail Stores  Segments total  Reconciliation(1)  IFRS
consolidated
 
Net Sales  183,335   4,236   187,571   -   187,571 
EBITDA  34,134   1,396   35,529   (24,022)  11,508 
Depreciation and amortization                  (2,261)
Finance expenses, net                  (199)
Income tax expense                  (6,982)
Net income                  2,066 

 

  Six months ended December 31, 2021 
(in € thousands) Online  Retail Stores  Segments total  Reconciliation(1)  IFRS
consolidated
 
Net Sales  336,966   8,436   345,402   -   345,402 
EBITDA  51,891   2,595   54,486   (44,495)  9,991 
Depreciation and amortization                  (4,443)
Finance expenses, net                  (388)
Income tax expense                  (10,390)
Net income                  (5,230)

 

 

(1)Reconciliation relates to corporate administrative expenses, which have not been allocated to the online operations or the retail stores, including share-based compensation of €16,339 thousand and €32,473 thousand during the three months and six months ended December 31, 2021. For the three months ended December 31, 2021, the share-based compensation of €16,339 thousand consists of €15,745 thousand IPO related share-based compensation and €594 thousand non-IPO related share-based compensation. During the six months ended December 31, 2021, the share-based compensation of €32,473 thousand consists of €31,289 thousand IPO related share-based compensation and €1,184 thousand non-IPO related share-based compensation.

 

7.Net Sales

 

Mytheresa Group earns revenues worldwide through its online operations, while all revenue associated with the retail stores is earned in Germany. Geographic location of online revenue is determined based on the location of delivery to the end customer.

 

15 

 

 

The following table provides Mytheresa Group's net sales by geographic location:

 

  For the three months ended December 31, 
(in € thousands) 2020  2021 
Germany  29,008   18.3%  34,738   18.5%
United States  17,539   11.1%  30,555   16.3%
Europe (excluding Germany) (*)  67,053   42.3%  75,460   40.2%
Rest of the world  44,993   28.4%  46,818   25.0%
   158,593   100.0%  187,571   100.0%

 

  For the six months ended December 31, 
(in € thousands) 2020  2021 
Germany  55,180   19.4%  65,421   18.9%
United States  32,793   11.5%  53,236   15.4%
Europe (excluding Germany) (*)  119,025   41.8%  139,129   40.3%
Rest of the world  77,954   27.4%  87,617   25.4%
   284,952   100.0%  345,402   100.0%

 

 

(1) No individual country other than Germany and the United States accounted for more than 10% of net sales.

(*) Including United Kingdom.

 

No single customer accounted for more than 10% of Mytheresa Group’s net sales in any of the periods presented. Substantially, all long-lived assets are located in Germany.

 

8.Cost of sales, exclusive of depreciation and amortization

 

During the three months ended December 31, 2020 and 2021, inventory write-downs classified as Cost of sales, exclusive of depreciation and amortization were incurred in the amount €1,168 thousand and €1,881 thousand, respectively. During the six months ended December 31, 2020 and 2021, inventory write-downs classified as Cost of sales, exclusive of depreciation and amortization were incurred in the amount €650 thousand and €2,993 thousand, respectively. Inventory is written down when its net realizable value is below its carrying amount. Mytheresa Group estimates net realizable value as the amount at which inventories are expected to be sold, taking into consideration fluctuations in selling prices due to seasonality, less estimated costs necessary to complete the sale.

 

9.Finance income (costs), net

 

Finance income (costs), net for the three months ended December 31, 2020 included €7,182 thousand in foreign exchange gains and €1,704 thousand in interest expense related to the shareholder loans. In January 2021, Mytheresa fully repaid these shareholder loans using a portion of the net proceeds from our initial public offering. The finance costs for the three months ended December 31, 2021 included mainly €199 thousand interest expense.

 

16 

 

 

Finance income (costs), net for the six months ended December 31, 2020 included €15,159 thousand in foreign exchange gains and €4,231 thousand in interest expense related to the shareholder loans. The finance costs for the six months ended December 31, 2021 included mainly €388 thousand interest expense.

 

10.Income taxes

 

In accordance with IAS 34 (Interim Financial Reporting) income tax expense for the condensed consolidated interim financial statements is calculated on the basis of the average annual tax rate that is expected for the entire fiscal year, adjusted for the tax effect of certain items recognized in the full interim period. As such, the effective tax rate in the interim financial statements may differ from management’s best estimate of the effective rate.

 

The effective tax rate was 27.5% for the six months ended December 31, 2020 and 201.4% for the six months ended December 30, 2021. The change in the effective tax rate in the six months ended December 31, 2021 compared to prior period primarily results from share-based payments programs that were granted in January and July 2021, for which the expenses are non-deductible for tax purposes.

 

11.Leases

 

On July 29th 2021 Mytheresa Group exercised a lease extension option to renew the leases for our two retail stores for an additional five years, starting on January 1, 2023 until December 31, 2027. Upon exercising the extensions, the Group recognized additional €9,485 thousand of right-of-use asset and lease liability.

 

12.Trade and other receivables

 

Details of trade and other receivables consist of the following:

 

  As of June 30,  As of December 31, 
(in € thousands) 2021  2021 
Trade and other receivables  5,030   7,358 
Other current receivables  -   34,456 
   5,030   41,814 

 

Other current receivables as of December 31, 2021 totaled €34,456 thousand (June 30, 2021: €0 thousand) and consist of receivables from certain brand partners, related to their repurchase of inventory when switching to the CPM.

 

17 

 

 

13.Share-based compensation

 

a)Description of share-based compensation arrangements

 

In connection with the IPO, share-based compensation programs were granted in January 2021 to selected key management members. Selected key management members were granted an IPO related award package. This package consists of the “Alignment Grant” and the “Restoration Grant”. Furthermore, restricted shares were granted to supervisory board members as part of the annual plan. All equity instruments that were granted under the IPO related award package and the annual plan are accounted for as equity-settled plans in accordance with IFRS 2.

 

i)IPO Related One-Time Award Package

 

Alignment Grant

 

Under this share-based payment program, options were granted to selected key management members. The options vest and become exercisable with respect to 25 % on each on the first four anniversaries of the grant date (January 20, 2021). After vesting, each option grants the right to purchase one ADS at a predefined exercise price per share. The vested options can be exercised up to 10 years after the grant date. The granted options are divided into three different tranches which have varying exercise prices. Overall, 6,478,761 options were granted to 21 key management members.

 

Restoration Grant

 

Under this share-based payment program, phantom shares were granted to selected key management members. Each phantom share represents the right of the grantee to receive one ADS in exchange for a phantom share. The granted phantom share vested immediately on the grant date and can be converted into an ADS at any time but are subject to transfer restrictions after conversion. Up to 25% of the granted phantom shares can be transferred after conversion at any time after the second anniversary of the grant date. The remaining 75% of the granted phantom shares can be transferred after conversion if certain conditions are met or at the fourth anniversary of the grant date at latest. The phantom shares can be converted into ADSs up to 10 years after the grant date. Overall, 1,875,677 phantom shares were granted to 21 key management members.

 

18 

 

 

The following table summarizes the main features of the one-time award package:

 

Type of arrangement Alignment Award Restoration Award
Type of Award Share Options Phantom Shares
Date of first grant January 20, 2021 January 20, 2021
Number granted 6,478,761 1,875,677
Vesting conditions 25% graded vesting of the granted share options in each of the next four years of service from grant date The restoration awards are fully vested on the Grant Date.

 

ii)Other One-Time Award Package

 

Sign-On RSU Award

 

Under this share-based payment program, a certain number of restricted share units (“RSUs”) were granted to a management member. Each restricted share unit (“RSU”) represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the closing price per ADS on the New York Stock Exchange on the start date. Subject to Employee’s continued employment with the Company, the RSUs will become fully vested on the twelve-month anniversary of date the employee commenced employment. As the Sign-on RSU Awards are not subject to an exercise price, the grant date fair value amounts to USD 31.90, the closing share price of the grant date.

 

The following table summarizes the main features of this award:

 

Type of arrangement Sign-On
RSU Award
Type of Award Restricted Shares Units
Date of first grant June 1, 2021
Number granted 6,269
Vesting conditions The restricted shares units are scheduled to vest in full on May 31, 2022.

 

19 

 

 

iii)Annual Plan

 

Supervisory Board Members Plan

 

Under this share-based payment program a certain number of restricted share awards was granted to supervisory board members. The ADSs (and the shares represented thereby) issued on the grant date pursuant to the restricted share award are subject to forfeiture in the event that grantee resigns or is removed from the supervisory board prior to the vesting date. The granted equity instruments vested on December 31, 2021. As the restricted share awards are not subject to an exercise price, the grant date fair value amounts to USD 31, the closing share price on the first trading day.

 

As of July 1, 2021, two Supervisory Board Members have been granted a certain number of restricted share awards. The ADSs (and the shares represented thereby) issued on the grant date pursuant to the restricted share award are subject to forfeiture in the event that grantee resigns or is removed from the supervisory board prior to the vesting date. The granted equity instruments vest on June 30, 2022. As the restricted share awards are not subject to an exercise price, the grant date fair value amounts to USD 30.68, the closing share price on the first trading day.

 

Long-Term Incentive Plan

 

Under this share-based payment program, 170,221 restricted share units (“RSUs”) were granted to selected key management members. Each restricted share unit (“RSU”) represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date.

 

Out of the granted RSUs, 35 % (59,577 RSUs; “time-vesting RSUs”) will be subject to a time-based vesting and 65 % (110,644 RSUs; “non-market performance RSUs”) will be subject to a time and performance based vesting. One-third (1/3) of the time-vesting RSUs awarded will vest in substantially equal installments on each of June 30, 2022, June 30, 2023 and June 30, 2024, subject to continued service on such vesting dates.

 

The non-market performance RSUs will vest after 3 years on June 30, 2024 and contain a performance condition that will determine the number of shares awardable at the end of the performance period pursuant to the respective vested restricted share units. The performance condition is based upon the three-year cumulative gross profit target. Potential award levels range from 25-200% of the grant depending on the achievement of a gross profit target over the three-year period. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 30.68, the closing share price of the grant date.

 

20 

 

 

The following table summarizes the main features of the annual plan:

 

  Annual Plan
Type of arrangement Supervisory Board Members plan Key Management Members
Long-Term Incentive Plan
Type of Award Restricted Shares  Restricted Shares  Time-vesting RSUs Non-market performance RSUs
Date of first grant January 20, 2021  July 1, 2021  July 1, 2021 July 1, 2021
Number granted 15,384  7,393  59,577 110,664
Vesting conditions The restricted shares are scheduled to vest in full on December 31, 2021.  The restricted shares are scheduled to vest in full on June 30, 2022.   Graded vesting of 1/3 of the time vesting RSUs over the next three years. 3 year’s services from grant date and achievement of a certain level of cumulative gross profit.

 

b)Reconciliation of outstanding share options

 

The number and weighted-average exercise prices of share options under the share option programs described above were as follows.

 

  Time-vested Options  Performance-based Options  Alignment award 
  Options  Wtd. Average Exercise Price (USD)  Options  Wtd. Average Exercise Price (USD)  Options  Wtd. Average Exercise Price (USD) 
June 30, 2020  2,005   500   1,620   1,000   -   N/A 
forfeited  -   N/A   -   N/A   -   N/A 
exercised  -   N/A   -   N/A   -   N/A 
December 31, 2020  2,005   500   1,620   1,000   -   N/A 
                         
June 30, 2021  -   -   -   -   6,478,761   8.30 
forfeited  -   N/A   -   N/A   -   N/A 
exercised  -   N/A   -   N/A   -   N/A 
December 31, 2021  -   -   -   -   6,478,761   8.30 

 

The range of exercise prices for the share options outstanding as of December 31, 2021 is between 5.79 USD and 11.58 USD. The average remaining contractual life is 9.1 years.

 

21 

 

 

c)Measurement of grant date fair values

 

Alignment Grant

 

The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows.

 

Black Scholes Model - Weighted Average Values Tranche I Tranche II Tranche III
Weighted average fair value $ 25.42 $ 22.93 $ 20.68
Exercise price $ 5.79 $ 8.68 $ 11.58
Weighted average share price  $ 31.00  $ 31.00  $ 31.00
Expected volatility 60% 60% 60%
Expected life  2.32 years 2.32 years 2.32 years
Risk free rate 0.0% 0.0% 0.0%
Expected dividends    - - -

 

Expected volatility has been based on an evaluation of the historical volatility of publicly traded peer companies, particularly over the historical period commensurate with the expected term.

 

Restoration Grant

 

As the phantom shares granted under the Restoration Award are not subject to an exercise price, the grant date fair value amounts to USD 31, the closing share price on the first trading day.

 

d)Share-based compensation expense recognized

 

Amounts recognized for share based payment programs were as follows:

 

  Six months ended December 31, 
(in € thousands) 2020  2021 
Classified within capital reserve (beginning of period)  1,055   76,325 
Expense related to old plans:        
Share options  14   - 
Restricted Shares  -   - 
Expense related to new plans:        
Share Options (Alignment Grant)  -   31,207 
Phantom Shares (Restoration Grant)  -   - 
Restricted Shares  -   305 
Restricted Share Units  -   962 
Classified within capital reserve (end of period)  1,069   108,798 

 

22 

 

 

 

The Mytheresa Group recognized total expense of €16.3 million for the three months ended December 31, 2021 and €32.5 million for the six months ended December 31, 2021 that were classified in equity.

 

14.            Financial instruments and financial risk management

 

Additional disclosures on financial instruments

 

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. The table excludes fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount reasonably approximates fair value.

 

Financial instruments as of June 30, 2021 were as follows:

 

  June 30, 2021 
(in € thousands) Carrying
amount
  No category in
accordance
with IFRS 9
  Category in
accordance with
IFRS 9
 Fair
value
  Fair
value
hierarchy
level
 
Financial assets                  
Current financial assets                  
Trade and other receivables  5,030   -   Amortized cost  -   - 
Cash and cash equivalents  76,760   -   Amortized cost  -   - 
Other assets  14,667   10,864           
thereof deposits  991   -   Amortized cost  -   - 
thereof other financial assets  2,812   -   Amortized cost  -   - 
Financial liabilities                  
Non-current financial liabilities                  
Lease liabilities  8,786   8,786   N/A  -   - 
Current financial liabilities                  
Lease liabilities  5,361   5,361   N/A  -   - 
Trade and other payables  44,210   -   Amortized cost  -   - 
Other liabilities  50,227   40,596           
thereof other financial liabilities  9,631   -   Amortized cost  -   - 

 

 23 

 

 

Financial instruments as of December 31, 2021 were as follows:

 

  December 31, 2021 
(in € thousands) Carrying
amount
  No category in
accordance
with IFRS 9
  Category in
accordance with
IFRS 9
 Fair
value
  Fair
value
hierarchy
level
 
Financial assets                  
Current financial assets                  
Trade and other receivables  41,814   -   Amortized cost  -   - 
Cash and cash equivalents  79,745   -   Amortized cost  -   - 
Other assets  17,535   12,752           
thereof deposits  828   -   Amortized cost  -   - 

thereof Derivatives (Hedge Accounting)

  50   -  N/A      Level 2 
thereof other financial assets  3,905   -   Amortized cost  -   - 
Financial liabilities                  
Non-current financial liabilities                  
Lease liabilities  16,063   16,063   N/A  -   - 
Current financial liabilities                  
Lease liabilities  5,443   5,443   N/A  -   - 
Trade and other payables  39,170   -   Amortized cost  -   - 
Other liabilities  62,711   46,337           

thereof Derivatives (Hedge Accounting)

  2,220   -  N/A      Level 2 
thereof other financial liabilities  14,154   -   Amortized cost  -   - 

 

Foreign exchange forwards are valued according to their present value of future cash flows based on forward exchange rates at the balance sheet date. The fair values of these instruments are also considered as level 2 fair values.

 

There were no transfers between the different levels of the fair value hierarchy as of June 30, 2021 and December 31, 2021. Mytheresa Group’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

 

As Mytheresa Group does not meet the criteria for offsetting, no financial instruments are netted.

 

As of December 31, 2021, Mytheresa Group has recorded negative €1,566 thousand net in cash flow hedge reserve. Would hedge accounting not have been applied, the amount would have been recorded in profit or loss immediately. The remaining portion of other comprehensive income is related to translation differences of balance sheet items denominated in foreign currencies in prior periods. For more details please refer to Mytheresa Group’s annual consolidated financial statements for fiscal 2021.

 

 24 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under ‘‘Risk Factors’’ in the annual report on Form 20-F filed on October 15, 2021 and in other parts of this report. Our fiscal year ends on June 30. Throughout this report, all references to quarters and years are to our fiscal quarters and fiscal years unless otherwise noted.

 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report contains forward-looking statements that involve risks, uncertainties, and assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report that are not purely historical, including without limitation statements in the following discussion and analysis of financial condition and results of operations regarding our projected financial position and results, business strategy, plans, and objectives of our management for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included in the annual report on Form 20-F filed on October 15, 2021. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

 

Overview

 

Mytheresa is a leading luxury e-commerce platform for the global luxury fashion consumer. We offer one of the finest edits in luxury, curated from more than 200 of the world’s most coveted brands and presented through a customer-first, digital experience. Our story began over three decades ago with the opening of Theresa, in Munich, one of the first multi-brand luxury boutiques in Germany. Mytheresa, which launched online in 2006, represented 98% of net sales and reached customers in over 130 countries online in fiscal 2021. We provide our customers a highly curated selection of products, access to exclusive capsule collections, engaging content, memorable service and a unique digital shopping experience. Our more than 30 years of market insights and long-standing relationships with the world’s leading luxury brands have established Mytheresa as a global authority in luxury fashion.

 

Although the persistent COVID-19 pandemic has had a substantial impact on the global economy, Mytheresa Group has not yet experienced material declines in revenue, deterioration in net assets, or other adverse effects from the pandemic.

 

 25 

 

 

To date, Mytheresa Group has incurred no significant supply chain or logistics disruptions with its brand partners, shipping providers, or our in-house operations and also no significant adverse effect of inflation. In response to the pandemic and in coordination with local government requirements, Mytheresa Group temporarily closed certain corporate and administrative offices in fiscal year 2020 and 2021, including its corporate headquarters in Munich, with affected employees working remotely. These closures were limited to administrative offices and retail stores, with its warehouse and logistics functions remaining in operation throughout the pandemic.

 

Mytheresa Group also implemented safe work and social distancing measures for all employees, including personnel in its central warehouse facility in Heimstetten, Germany. Due to government restrictions to contain the coronavirus, Mytheresa stores had to close from mid-December 2020 to end of February 2021, and when the stores reopened in fiscal year 2021 there were restrictions on the total number of customers allowed in the stores. Short-term work allowance has been applied to store employees for the same period. In fiscal 2022 and as of this reporting date, Mytheresa Group has not been impacted negatively from the COVID-19 pandemic.

 

The COVID-19 pandemic remains an evolving situation. Uncertainties in the global economy may adversely impact the Mytheresa Group’s brand partners, customers, and other business partners and availability of our workforce, which may interrupt its supply chain, impact future sales, and require other changes to our operations. With a global or regional recovery from the COVID-19 pandemic, the Mytheresa Group online shops may suffer from reduced online demand and therefore slower revenue growth. These uncertainties may also lead to increased asset recovery and valuation risks, such as potential impairment of goodwill and intangible assets and inventories. However, management does not currently anticipate any long-term adverse effects from the pandemic. Overall inflation will be reflected in customer price increases, as the Mytheresa Group takes expected increases in recommended retail prices from its suppliers into consideration when determining its own price increases. Overall, demand for luxury products worldwide has been less effected by demand shifts due to inflation than other industries. Mytheresa Group’s forecast remains positive both mid and long-term for our store and online operations. Management will continue to closely monitor the effects of the pandemic, including its impact on inventories and other significant estimates.

 

Key Operating and Financial Metrics

 

We use the following operating and financial metrics to assess the progress of our business, make decisions on where to allocate time and investments and assess the near-term and longer-term performance of our business:

 

  Three Months Ended  Six Months Ended
(in thousands) December 
31, 2020
  December 
31, 2021
  December 
31, 2020
  December
 31, 2021
Gross Merchandise Value (GMV) (1) 158,593  200,185  284,952  364,040
Active customers (LTM in thousands)(2)   569   740   569   740
Total orders shipped (LTM in thousands)(2)  1,256   1,656   1,256   1,656
Average order value (LTM)(2)  592   611   592   611
Adjusted EBITDA(3) 22,143  28,303  32,581  42,330
Adjusted Operating Income(3) 20,097  26,042  28,514  37,887
Adjusted Net Income(3) 14,785  18,862  20,058  27,109
Net Income 15,724  2,066  25,354  (5,230)
Net Sales 158,593  187,571  284,952  345,402

 

 26 

 

 

(1)Gross Merchandise Value (“GMV”) is an operative measure and means the total Euro value of orders processed, either as principal or as agent. GMV is inclusive of product value, shipping and duty. It is net of returns, value added taxes and cancellations. GMV does not represent revenue earned by us.

 

(2)Active customers, total orders shipped and average order value are calculated based on the GMV of orders shipped from our sites during the last twelve months (LTM) ended on the last day of the period presented.

 

(3)EBITDA, Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income are measures that are not defined under IFRS. We use these financial measures to evaluate the performance of our business. We present Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe these measures are helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of our ongoing operations and performance. Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income have limitations, because they exclude certain types of expenses. Furthermore, other companies in our industry may calculate similarly titled measures differently than we do, limiting their usefulness as comparative measures. We use Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income as supplemental information only. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. The following are reconciliations of Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income to their most directly comparable IFRS measures.

 

The following tables set forth the reconciliations of net income to EBITDA and adjusted EBITDA, operating income to adjusted operating income and net income to adjusted net income:

 

  Three Months Ended Six Months Ended
(in € thousands) December 31, 2020 December 31, 2021 December 31, 2020 December 31, 2021
Net income  15,724  2,066  25,354  (5,230)
Finance income (expenses), net  (4,975)  199  (10,157)  388
Income tax expense  5,866  6,982  9,627  10,390
Depreciation and amortization  2,046  2,261  4,067  4,443

thereof depreciation of right of use assets

  1,304  1,382  2,612  2,728
EBITDA  18,661  11,508  28,891  9,991

IPO preparation and transaction costs (1)

  3,475  -  3,676  -
Other transaction-related costs(2)  -  1,050  -  1,050

IPO related share-based compensation(3)

  7  15,745  14  31,289
Adjusted EBITDA  22,143  28,303  32,581  42,330

 

 27 

 

 

  Three Months Ended  Six Months Ended 
(in € thousands) December 31,
2020
  December 31,
2021
  December 31,
2020
  December 31,
2021
 
Operating Income  16,615   9,246   24,824   5,547 

IPO preparation and transaction costs(1)

  3,475   -   3,676   - 
Other transaction-related costs(2)  -   1,050   -   1,050 

IPO related share-based compensation(3)

  7   15,745   14   31,289 
Adjusted Operating Income  20,097   26,042   28,514   37,887 

 

  Three Months Ended  Six Months Ended 
(in € thousands) December 31,
2020
  December 31,
2021
  December 31,
2020
  December 31,
2021
 
Net Income  15,724   2,066   25,354   (5,230)
IPO preparation and transaction costs(1)  3,475   -   3,676     
Other transaction-related costs(2)  -   1,050   -   1,050 

IPO related share-based compensation(3)

  7   15,745   14   31,289 

Finance income (expenses) on shareholder loans (4)

  (5,312)  -   (10,928)  - 
Income tax effect(5)  891   -   1,942   - 
Adjusted Net Income  14,785   18,862   20,058   27,109 

 

 

(1)Represents non-recurring professional fees, including consulting, legal and accounting fees, related to our initial public offering, which are classified within selling, general and administrative expenses.

(2)Other transaction-related costs represents non-recurring professional fees, including advisory and accounting fees, related to potential transactions.

(3)In fiscal 2021, with the effective IPO, certain key management personnel received a one-time granted share-based compensation, for which the share-based compensation expense will be recognized upon defined vesting schedules in the future periods, including €31.2 million for the six months ended December 31, 2021. We do not consider these expenses to be indicative of our core operating performance.

(4)Our Adjusted Net Income excludes finance income (expenses) associated with our Shareholder Loans, which we do not consider to be indicative of our core performance. We did not receive any cash proceeds under the Shareholder Loans, which originated as part of the Neiman Marcus acquisition in 2014. In January 2021, we repaid our Shareholder Loans (principal plus outstanding interest) using a portion of the net proceeds from our initial public offering.

(5)Reflects adjustments to historical income tax expense to reflect changes in taxable income for each of the periods presented due to changes in finance expenses related to the Shareholder Loans, assuming a statutory tax rate of 27.8%.

 

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Gross Merchandise Value (GMV)

 

GMV is an operative measure and means the total Euro value of orders processed, including the value of orders processed on behalf of others for which we earn a commission. GMV is inclusive of product value, shipping and duty. It is net of returns, value added taxes and cancellations. GMV does not represent revenue earned by us. We use GMV as an indicator for the usage of our platform that is not influenced by the mix of direct sales and commission sales. The indicators we use to monitor usage of our platform include, among others, active customers, total orders shipped and GMV.

 

Active Customers

 

We define an active customer as a unique customer account from which an online purchase was made across our sites at least once in the preceding twelve-month period. In any particular period, we determine our number of active customers by counting the total number of unique customers who have made at least one purchase across our sites in the preceding twelve-month period, measured from the last date of such period. We view the number of active customers as a key indicator of our growth, the reach of our website, consumer awareness of our value proposition and the desirability of our product assortment. We believe our number of active customers drives both net sales and our appeal to brand partners.

 

Total Orders Shipped

 

We define total orders shipped as an operating metric used by management, which is calculated as the total number of online customer orders shipped to our customers during the twelve months ended on the last day of the period presented. We view total orders as a key indicator of the velocity of our business and an indication of the desirability of our products. Total orders shipped and total orders recognized as net sales in any given period may differ slightly due to orders that are in transit at the end of any particular period.

 

Average Order Value

 

We define average order value as an operating metric used by management, which is calculated as our total gross sales from online orders shipped from our sites during the twelve months ended on the last day of the period presented divided by the total online orders shipped during the same twelve-month period. We believe our consistent high average order value reflects our commitment to price integrity and the luxury nature of our products. Average order value may fluctuate due to a number of factors, including merchandise mix and new product categories.

 

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Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income

 

Adjusted EBITDA is a non-IFRS financial measure that we calculate as net income before finance expense (net), taxes, and depreciation and amortization, adjusted to exclude IPO preparation and transaction costs, other transaction related-costs and IPO related share-based compensation expenses. Adjusted Operating Income is a non-IFRS financial measure that we calculate as operating income, adjusted to exclude IPO preparation and transaction costs, transaction related-costs and IPO related share-based compensation expenses. Adjusted Net Income is a non-IFRS financial measure that we calculate as net income, adjusted to exclude finance expenses on our Shareholder Loans, IPO preparation and transaction costs, transaction related-costs, IPO related share-based compensation expenses and related income tax effects. Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income are key measures used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income facilitates operating performance comparisons on a period-to-period basis and excludes items that we do not consider to be indicative of our core operating performance.

 

Adjusted selling, general and administrative

 

Adjusted selling, general and administrative is a non-IFRS financial measure that we calculate as selling, general and administrative adjusted to exclude IPO preparation and transaction costs, other transaction-related costs and IPO-related share-based compensation expenses.

 

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Factors Affecting our Performance

 

To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we focus on the factors described below. While each of these factors presents significant opportunity for our business, collectively, they also pose important challenges that we must successfully address in order to sustain our growth, improve our operating results and achieve and maintain our profitability, including those discussed below and in the section of this report titled ‘‘Risk Factors.’’

 

Overall Economic Trends

 

The overall economic environment and related changes in consumer behavior have a significant impact on our business. Though it is generally more muted in our high net worth customer cohort versus a broader demographic, positive conditions in the broader economy promote customer spending on our website, while economic weakness, which generally results in a reduction of customer spending, may have a negative effect on customer spend. Global macroeconomic factors can affect customer spending patterns, and consequently our results of operations. These include, but are not limited to, employment rates, trade negotiations, availability of credit, interest rates and fuel and energy costs. In addition, during periods of low unemployment, we generally experience higher labor costs.

 

Growth in Brand Awareness

 

We will continue to invest in brand marketing activities to expand brand awareness. As we build our customer base, we will launch additional brand marketing campaigns, host events and develop in-house product content to attract new customers to our platform. If we fail to cost-effectively promote our brand or convert impressions into new customers, our net sales growth and profitability may be adversely affected.

 

Luxury Brand Partners

 

Our business model relies on providing our customers access to a curated assortment of top luxury brands. We believe our longstanding relationships with top luxury fashion brands represent a competitive advantage. We employ a rigorous framework and deep buying expertise, informed by customer data, to meticulously buy and curate an exclusive assortment on our website. As we grow, we strive to maintain our exclusive relationships while forming new relationships with up and coming brands to the extent there is customer demand for such brands. However, if we are unsuccessful in maintaining these relationships or developing new relationships, our business and results of operations may be adversely affected.

 

Growth of Online Luxury

 

According to the 2020 Bain Study, the online penetration of luxury personal goods is expected to increase from 12% to 31-32% from 2019 to 2025. The growth in online will be driven by online platforms taking share from traditional retailers, driven by consumer preference for online shopping and the ease afforded by multibrand sites. Mytheresa has a long history of being at the forefront of this dialogue experimenting with brand partners through relevant brand collaborations and exclusive product offerings. However, if we fail to capture the future online spending shift with relevant product or if our competitors engage in promotional activity over multiple seasons, our customer growth may decelerate and our results of operations may be adversely affected.

 

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Growth in Men’s and Kidswear

 

In 2019 we launched Mytheresa Kids, and in January 2020, we launched Mytheresa Men to expand our curated offering to these large and underserved categories. We believe there is a dearth of curated online multi-brand offerings in both categories which we can capture through our differentiated value proposition. We have built out full buying, marketing and merchandising teams, leveraged our brand relationships and are supporting these categories with exclusive capsules, experiences and content. We believe we can curate and assort collections for men, as we have done with women’s, expanding our value proposition to these new categories.

 

Inventory Management

 

We utilize our customer data and collaborate with brand partners to assort a highly relevant assortment of products for our customers. The expertise of our buyers and our data help us gauge demand and product architecture to optimize our inventory position. Through analyzing customer feedback and real-time customer purchase behavior, we are able to efficiently predict demand, sizing and colorways beyond the insights of our buyers. This minimizes our portfolio risk and increases our sell-through. As we scale, our buying process will be further enhanced through the growth in our global data repository and our ability to leverage data science as part of the buying process. Additionally, our investments in different facets of our inventory offering fluctuate alongside shifting consumer trends and the fundamental needs of our business.

 

Investment in our Operations and Infrastructure

 

As we enhance our offering and grow our customer base, we will incur additional expenses. Our future investments in operations and infrastructure will be informed by our understanding of global luxury trends and the needs of our platform. As we continue to scale, we will be required to support our online offering with additional personnel. We will invest capital in inventory, fulfillment capabilities, and logistics infrastructure as we drive efficiencies in our business, localize our offering, enter new categories and partner with new brands. We will also actively monitor our fulfillment capacity needs, investing in capacity and automation in a selective manner.

 

Curated Platform Model (CPM)

 

CPM integrates Mytheresa Group with brand partners’ direct retail operations which provides access to highly desirable products at scale, improves capital efficiency and is accretive to top- and bottom-line. The products are selected by Mytheresa Group out of a much larger brand retail collection. Through the CPM, we are able to directly maintain the customer relationship and manage the fulfilment of the order up to the shipment to the end customer. Early season deliveries are aligned with retail channels. In addition, Mytheresa receives regular in-season replenishment of core as well as seasonal products. The product is delivered to the Mytheresa Group warehouse; however, the inventory is owned by the brand partner until it is sold to a customer. Unsold merchandise will either be returned to the brand partner by the end of the season or carried forward for the new season. Mytheresa Group acts as an agent, with the CPM platform fees recorded as net sales.

 

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Components of our Results of Operations

 

Net sales consist of revenues earned from sales of clothing, bags, shoes, accessories and fine jewelry categories through our sites and our flagship retail store and our recently opened men´s store, as well as shipping revenue and delivery duties paid when applicable, net of promotional discounts and returns. The platform fees originating from the curated platform model are also included in our net sales. Revenue is generally recognized upon delivery to our customers. Changes in our reported net sales are mainly driven by growth in the number of our active customers, changes in average order value, the total number of orders shipped and fees in relation to our curated platform model.

 

Cost of sales, exclusive of depreciation and amortization includes the cost of merchandise sold, net of trade discounts, in addition to inventory write-offs and delivery costs of product from our brand partners. These costs fluctuate with changes in net sales and changes in inventory write-offs due to inventory aging.

 

Shipping and payment costs consist primarily of shipping fees paid to our delivery providers, packaging costs, delivery duties paid for international sales and payment processing fees paid to third parties. Shipping and payment costs fluctuate based on the number of orders shipped and net sales. General increases are due to a higher share of international sales and a higher share of countries where we pay all customs duties for the customer, for example in the USA.

 

Marketing expenses primarily consist of online advertising costs aimed towards acquiring new customers, including fees paid to our advertising affiliates, marketing to existing customers, and other marketing costs, which include events productions, public relations, and development of creative content. We expect marketing expenses to increase over time, but to stay stable as a percentage of GMV in the long term.

 

Selling, general and administrative expenses include personnel costs and other types of general and administrative expenses. Personnel costs, which constitute the largest percentage of selling, general and administrative expenses, include salaries, benefits, and other personnel-related costs for all departments within the Company, including fulfillment and marketing operations, creative content production, IT, buying, and general corporate functions. General and administrative expenses include IT expenses, rent expenses for leases not capitalized under IFRS 16, consulting services, and buying expenses. Although selling, general and administrative expenses will increase as we grow and become a publicly traded company, we expect these expenses to stay stable as a percentage of net sales.

 

Depreciation and amortization include the depreciation of property and equipment, including right-of-use assets capitalized under IFRS 16, leasehold improvements, and amortization of technology and other intangible assets.

 

Other expense (income), net principally consists of gains or losses from foreign currency fluctuations, gains or losses on disposal of property, plant, and equipment and other miscellaneous expenses and income.

 

Finance income (costs), net in fiscal 2021 consist primarily of interest incurred in relation to our U.S. Dollar denominated Shareholder Loans and related foreign exchange gains and losses. In January 2021, we fully repaid our Shareholder Loans (principal plus outstanding interest) using a portion of the net proceeds from our initial public offering. In fiscal 2022, our finance costs relate to interest expense on our leases as well as on our Revolving Credit Facilities with Commerzbank Aktiengesellschaft (“Commerzbank”) and UniCredit Bank AG (“UniCredit”) (together, our “Revolving Credit Facilities”).

 

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Results of Operations

 

  Three Months Ended  Six Months Ended 
(in % of Net sales) December 31, 2020  December 31, 2021  December 31, 2020  December 31, 2021 
Gross Merchandise Value (GMV)  158,593   100.0%  200,185   100.0%  284,952   100.0%  364,040   100.0%
                                 
Net sales  158,593   100.0%  187,571   93.7%  284,952   100.0%  345,402   94.9%
Cost of sales, exclusive of depreciation and amortization  (80,023)  (50.5%)  (87,453)  (43.7%)  (147,701)  (51.8%)  (167,969)  (46.1%)
Gross profit  78,570   49.5%  100,118   53.4%  137,251   48.2%  177,433   51.4%
Shipping and payment cost  (17,833)  (11.2%)  (25,509)  (12.7%)  (32,666)  (11.5%)  (45,476)  (12.5%)
Marketing expenses  (19,696)  (12.4%)  (23,828)  (11.9%)  (37,137)  (13.0%)  (46,256)  (12.7%)
Adjusted Selling, general and administrative expenses  (18,622)  (11.7%)  (24,185)  (12.1%)  (33,971)  (11.9%)  (44,799)  (12.3%)
Depreciation and amortization  (2,046)  (1.3%)  (2,261)  (1.1%)  (4,068)  (1.4%)  (4,443)  (1.2%)
Other expense, net  (276)  (0.2%)  1,708   0.9%  (897)  (0.3%)  1,427   0.4%
Adjusted Operating income  20,097   12.7%  26,042   13.9%  28,513   10.0%  37,887   11.0%

 

Percentages are in relation to GMV; Gross Profit and Adjusted Operating income are in relation to Net Sales.

 

  Three Months Ended  Six Months Ended 
(in € thousands) December
 31, 2020
  December
 31, 2021
  December 
31, 2020
  December 
31, 2021
 
Net sales  158,593   187,571   284,952   345,402 
Cost of sales, exclusive of depreciation and amortization  (80,023)  (87,453)  (147,701)  (167,969)
Gross profit  78,570   100,118   137,251   177,433 
Shipping and payment cost  (17,833)  (25,509)  (32,666)  (45,476)
Marketing expenses  (19,696)  (23,828)  (37,137)  (46,256)
Selling, general and administrative expenses  (22,104)  (40,980)  (37,660)  (77,138)
Depreciation and amortization  (2,046)  (2,261)  (4,067)  (4,443)
Other income (expense), net  (276)  1,708   (897)  1,427 
Operating income  16,615   9,246   24,824   5,547 
Finance (expense) income, net  4,975   (199)  10,157   (388)
Income (loss) before income taxes  21,590   9,048   34,981   5,159 
Income tax (expense) income  (5,866)  (6,982)  (9,627)  (10,390)
Net income (loss)  15,724   2,066   25,354   (5,230)

 

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Gross Merchandise Value (GMV)

 

GMV increased by €41.6 million, or 26.2% from €158.6 million for the three months ended December 31, 2020 to €200.2 million for the three months ended December 31, 2021 and for the six months ended December 31, 2021 by €79.1 million, or 27.8% from €285.0 million for the six months ended December 31, 2020 to €364.0 million. The reason for the growth in GMV is primarily due to the fact that we were able to grow our active customers on the base of strong customer retention and with continuous effort to win new customers with the effective use of our performance marketing tools. GMV indicates the total amount of merchandise that our customers transact on our platform, and it reveals the depth of our customer relationships. We switched 6 brand partners from wholesale to CPM by the end of December 2021. Along with the strategic benefits of this partnership, the CPM enables a continued strong GMV growth and a profitability that is comparable to the wholesale model.

 

Net sales

 

Net sales increased by €29.0 million, or 18.2% from €158.6 million for the three months ended December 31, 2020 to €187.6 million for the three months ended December 31, 2021 and by €60.5 million, or 21.2%, from €285.0 million for the six months ended December 31, 2020 to €345.4 million for the six months ended December 31, 2021. The slower increase in net sales compared to our GMV growth is due to the effect of brands switching from the wholesale model to the CPM. With this switch our reported net sales from these brands do not equal the GMV from these brands as before, but only the platform fee from these brands GMV. This effect is recognized only in the first twelve months after a brand switches from wholesale to CPM. Twelve months after the shift of a brand from Wholesale to CPM, net sales from this brand again grows with the same rate than the GMV from the brand. In addition, net sales grew with total orders shipped. For the last twelve months, our total orders shipped increased from 1.26 million to 1.66 million, or 31.8%. In the three months ended December 31, 2021, we achieved a strong net sales growth in all regions of the world, especially in the US growing by 74% compared to the previous year quarter and 62% for the six months ended December 31, 2021 compared to previous year period.

 

Cost of sales, exclusive of depreciation and amortization

 

Cost of sales, exclusive of depreciation and amortization increased by €20.3 million, from €147.7 million for the six months ended December 31, 2020 to €168.0 million for the six months ended December, 2021. For the three months ended December 31, 2021 Cost of sales, exclusive of depreciation and amortization increased by €7.4 million compared to the three months ended December 31, 2020. The increase during the periods presented mainly resulted from an increase in total orders shipped. Overall, our cost of sales as a percentage of GMV decreased from 51.8% for the six months ended December 31, 2020 to 46.1% for the six months ended December 31, 2021 and for the three months ended December 31, 2020 from 50.5% to 43.7% for the three months ended December 31, 2021. The decrease is primarily due to the increasing CPM revenue, as well as a higher share of full-price sell-through. For CPM revenue, no cost of sales, exclusive of depreciation and amortization are recognized.

 

Gross profit

 

Gross profit amounted to €100.1 million for the three months ended December 31, 2021, which represents an increase of 27.4% from €78.6 million compared to the three months ended December 31, 2020. For the six months ended December 31, 2021 gross profit was at €177.4 million, an increase of €40.2 million or 29.3% year-over-year. For that period the gross profit margin in relation to net sales increased from 49.5% in the three months ended December 31, 2021 to 53.4% for the three months ended December 31, 2021 and from 48.2% to 51.4% for the six months ended December 31, 2020 to December 31, 2021, driven primarily by our increasing CPM revenues, and to a lesser extent a higher level of full-price sell-through. Sales from the CPM generate 100% gross margin.

 

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Shipping and payment costs

 

Shipping and payment costs increased by €7.7 million or 43.0% from €17.8 million for the three months ended December 31, 2020 to €25.5 million for the three months ended December 31, 2021 and €12.8 million, or 39.2%, from €32.7 million for the six months ended December 31, 2020 to €45.5 million for the six months ended December 31, 2021. The increase was primarily driven by an increase in total orders shipped. As a percentage of GMV, shipping and payment cost increased from 11.2% for the three months ended December 31, 2020 to 12.7% for the three months ended December 31, 2021 and from 11.5% for the three months ended December 31, 2020 to 12.5% for the three months ended December 31, 2020, due to a higher share of international sales and a higher share of countries where we pay all customs duties for the customer, for example in the US.

 

Marketing expenses

 

Marketing expenses increased from €19.7 million for the three months ended December 31, 2020 to €23.8 million for the three months ended December 31, 2021 and increased by €9.2 million from €37.1 million to €46.3 million for the six months ended December, 2021 compared to the prior year period. Marketing expenses increased primarily due to an increase in the number of customers acquired and additional PR campaigns and local events compared to prior year period. We constantly improve the utilization of data analytics and algorithms to optimize our paid marketing efforts and bidding strategies.

 

As a percentage of GMV, marketing expenses decreased from 12.4% for the three months ended December 31, 2020 to 11.9% for the three months ended December 31, 2021. For the six months ended December 31, 2021 the percentage decreased to 12.7% compared to prior period at 13.0%

 

Despite a strong 30.2% increase in active customers for the last twelve months ended December 31, 2021, with very good customer cohort performance compared to previous customer cohorts, Mytheresa was able to attract new customers at competitive cost. It is our stated strategy to increase our brand building efforts by reinvesting the achieved cost efficiencies in online performance marketing.

 

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Selling, general and administrative expenses

 

Selling, general and administrative expenses consist of personnel-related expenses and other general and administrative expenses, including IT expenses, costs associated with the distribution center and other overhead costs.

 

  Three Months Ended Six Months Ended
(in € thousands) December 
31, 2020
 December 
31, 2021
 Change
in %
 December 
31, 2020
 December 
31, 2021
 Change
in %
Personnel expenses  15,595  33,848  117.0%  28,279  65,049  130.0%

thereof fulfilment personnel expense

  3,282  4,033  22.9%  6,195  7,707  24.4%
General and administrative expenses  6,509  7,132  9.6%  9,382  12,089  28.8%
Total Selling, general and administrative expenses  22,104  40,980  85.4%  37,661  77,138  104.8%

 

  Three Months Ended Six Months Ended
(in € thousands) December 
31, 2020
 December
 31, 2021
 

Change
in % /
BPs

 December 
31, 2020
 December 
31, 2021
 

Change
in % /
BPs

Selling, general and administrative expenses  22,104  40,980  85.4%  37,661  77,138  104.8%
IPO related share-based compensation (1)  7  15,745  N/A  14  31,289  N/A
IPO preparation and transaction costs  3,475  -  N/A  3,676  -  N/A
Other transaction-related costs  -  1,050  N/A  -  1,050  N/A
Adjusted Selling, general and administrative expenses  18,622  24,185  29.9%  33,971  44,799  31.9%
in % of GMV  11.7%  12.1%  40 BPs  11.9%  13.0%  120 BPs

 

 

(1)            In fiscal 2021, with the effective IPO, certain key management personnel received a one-time granted share-based compensation, for which the share-based compensation expense will be recognized upon defined vesting schedules in the future periods, including €31.2 million for the six months ended December 31, 2021. We do not consider these expenses to be indicative of our core operating performance.

 

The total selling, general and administrative expenses increased by €18.9 million for the three months ended December 31, 2021 from €22.1 million in three month ended December 31, 2020 to €41.0 million in three months ended December 31, 2021. The Mytheresa Group recognized IPO related share-based compensation expenses for the three months ended December 31, 2021 of €15.7 million and for the six months ended December 31, 2021 of €31.2 million. Excluding the IPO related share-based compensation expenses, IPO preparation and transaction costs as well as other transaction-related costs, the selling, general and administrative expenses as a percentage of GMV increased for the three months ended December 31, 2021 from 11.7% to 12.1% and for the six months ended December 31, 2021 from 11.9% to 13.0% compared to prior year period, due to higher personnel expenses, insurance, consulting and IT expenditures, in the periods.

 

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The increase in personnel expenses is also attributable primarily to an increase in the number of FTE’s during the same comparative period. One of the main drivers of the increase in employees and personnel-related expenses is the addition of new fulfillment personnel. Overall, personnel expenses as a percentage of GMV increased from 9.8% in the three months ended December 31, 2020 to 16.9% for the three month ended December 31, 2021 and from 9.9% in the six months ended December 31, 2020 to 18.8% for the six months ended December 31, 2021. The increase is mainly driven by IPO related share-based compensation expenses. Excluding the IPO related share-based compensation expenses, personnel-related expenses as a percentage of GMV decreased for the three months ended December 31, 2021 from 9.8% to 9.0% and for the six months ended December 31, 2021 from 9.9% to 9.8%.

 

Other general and administrative expenses increased by €0.6 million, from €6.5 million during the three months ended December 31, 2020 to €7.1 million during the three months ended December 31, 2021 and increased for the six months ended December 31, 2020 from €9.4 million to €12.1 million for the six months ended December 31, 2021, mainly due to higher insurance, consulting and IT expenditures, in the period.

 

Depreciation and amortization

 

Depreciation and amortization expenses remained relatively stable, increasing from €2.0 million for the three months ended December 31, 2020 to €2.2 million for the three months ended December 31, 2021 and from €4.1 million for the six months ended December 31, 2020 to €4.4 million for the six months ended December 31, 2021.

 

Finance income (costs), net

 

Finance expenses in fiscal 2021 originated primarily from our Shareholder Loans, with a small portion related to the use of our Revolving Credit Facilities, which we utilized at certain points in fiscal 2021 as we built our inventory.

 

In fiscal 2021, we incurred interest expense, in addition to foreign currency gains and losses, on our U.S. Dollar denominated Shareholder Loans. During the six months ended December 31, 2020, total interest expense and foreign currency gains associated with the Shareholder Loans were €4.2 million and €15.2 million, respectively.

 

In January 2021, we repaid our Shareholder Loans (principal plus outstanding interest) using a portion of the net proceeds from our initial public offering.

 

Total interest and other expenses on our Revolving Credit Facilities was €0.4 million and €0.0 million during the three months ended December 31, 2020 and 2021, respectively as well as €0.5 million and €0.1 million during the six months ended December 31, 2020 and 2021, respectively.

 

Total interest expense on leases capitalized under IFRS 16 was € 0.2 million and € 0.2 million during the three months ended December 31, 2020 and 2021, respectively as well as €0.3 million and €0.3 million for the six months ended December 31, 2020 and 2021, respectively.

 

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Liquidity and Capital Resources

 

Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes, including income taxes. Our capital expenditures consist primarily of capital improvements to our office and logistics facilities and headquarters and IT licenses.

 

Our primary sources of liquidity are cash generated from our operations, available cash and cash equivalents and our Revolving Credit Facilities, which have a combined line of credit of €90 million as well as the proceeds from our initial public offering in January 2021.

 

Our Revolving Credit Facilities provide short-term liquidity, which we may need due to the seasonal variability of our business. As of December 31, 2021, our cash and cash equivalents were €79.7 million. As of December 31, 2021, approximately 98% of our cash and cash equivalents were held in Germany, of which approximately 69%, 13%, 6% and 6% were denominated in, Euro, U.S. Dollars, British Pounds and Hongkong-Dollars respectively. No other currency held in Germany accounted for more than 5% of our cash and cash equivalents. Approximately 2% of our cash and cash equivalents were held outside of Germany, with the majority held in the United States in US Dollars. While we have a stable and growing customer base that has provided us with annual increases in net sales and corresponding cash inflows, we experience seasonal increases in cash expenditures during the first and third quarters of each fiscal year as we build our inventory, offset by increases in revenues during the second and fourth quarters. As a result, we experience fluctuations in cash flows throughout the year.

 

We typically drew on our Revolving Credit Facilities as a result of seasonal volatility in our business.

 

Mytheresa Group fully repaid any borrowings under the revolving credit facilities as of January 28, 2021 and since then has not used the revolving credit facilities. As of December 31, 2021, the interest rates were 2.20% and 2.25% for the Commerzbank and UniCredit facilities, respectively, if used as basic short-term borrowings. Typically, we use monthly money market loans with an interest rate of Borrowings 1.3% to 1.4% under our Revolving Credit Facilities which are secured by our inventory and customer receivables.

 

Under the Revolving Credit Facilities, we have financial covenants relating to inventory as a borrowing base and a maximum group debt to equity ratio. As of December 31, 2021, we were in compliance with all covenants for the Revolving Credit Facilities.

 

Our ability to make principal and interest payments on our Revolving Credit Facilities, in addition to funding planned capital expenditures, will depend on our ability to generate cash in the future. Our future ability to generate cash from operations is, to a certain extent, subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations we believe that our existing cash balances and expected cash flows generated from operations, as well as our financing arrangements under the Revolving Credit Facilities, are sufficient to meet our operating requirements for at least the next twelve months.

 

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The following table shows summary consolidated cash flow information for the six months ended December 31, 2020 and 2021:

 

  Six months ended December 31,
(in € thousands) 2020 2021
Consolidated Statement of Cash Flow Data:    
Net cash inflow  (outflow) inflow from operating activities  (29,368)  7,172
Net cash inflow (outflow) from investing activities  (1,319)  (1,057)
Net cash inflow (outflow) from financing activities  26,570  (3,076)

 

Net cash (outflow) inflow from operating activities

 

During the six months ended December 31, 2020, operating activities used €29.4 million in cash and cash equivalents, primarily resulting from net income of €25.4 million, non-cash charges of €3.6 million, and changes in operating assets and liabilities of €58.3 million.

 

Net cash used by changes in operating assets and liabilities during the six months ended December 31, 2020 consisted primarily of a €62.8 million increase in inventories and a €2.6 million increase in trade and other payables, partially offset by an €3.0 million increase in other liabilities and a €2.0 decrease in other assets. The increase in inventories resulted from an overall expansion of our business to support forecasted increases in net sales, while trade and other payables increased as a result of payment timing for inventory purchases towards the end of the six months ended December 31, 2020.

 

During the six months ended December 31, 2021, operating activities generated €7.2 million in cash and cash equivalents, primarily resulting from changes in operating assets and liabilities of €35.3 million, net loss of €5.2 million, and share based compensation of €32.5 million.

 

Net cash inflows from operating activities during the six months ended December 31, 2021 resulted primarily from net income, excluding non-cash share-based compensation, partially offset by changes in working capital. The increase in trade and other receivables includes the recognition of receivables in the amount of €34.5 million against certain brand partners as a result of their transition to the CPM, which led to a corresponding decrease in inventory for the respective merchandise which was sold back to these brand partners.

 

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Net cash outflow from investing activities

 

Cash used in investing activities were €1.3 million and €1.1 million for the six months ended December 31, 2020 and 2021, respectively, resulting from equipment purchases.

 

Net cash (outflow) inflow from financing activities

 

Net cash provided by financing activities during the six months ended December 31, 2020 was €26.6 million, which resulted from net proceeds received under our Revolving Credit Facilities of €36.0 million, partially offset by lease payments of €3.1 million, repayment of Shareholder Loans of €2.4 million and interest payments of €4.0 million, primarily resulting from €3.1 million of interest payments on our Shareholder Loans.

 

Net cash used for financing activities during the six months ended December 31, 2021 was €3.0 million, which resulted from interest payments of €0.4 million and lease payments of €2.7 million.

 

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Interest Rate Risk

 

The fair value of our cash and cash equivalents that were held primarily in cash deposits would not be significantly affected by either an increase or decrease in interest rates due to the short-term nature of these instruments. We do not expect that interest rates will have a material impact on our results of operations. Interest expense under our Revolving Credit Facilities is historically immaterial.

 

Foreign Exchange Risk

 

We generate revenues in eight currencies, including the Euro, U.S. Dollar and Pound Sterling. While most of our sales are dominated in Euros, we have a significant amount of sales denominated in U.S. Dollars and Pound Sterling. As a result, our revenue may be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in U.S. Dollars and Pound Sterling. Our foreign exchange risk is less pronounced for Cost of sales, exclusive of depreciation and amortization and operating expenses. Approximately 96% of our purchases are denominated in Euros and approximately 99% of our employees are located in Germany or other Eurozone countries.

 

Furthermore, our two Shareholder Loans are denominated in U.S. Dollars. Fluctuations in the exchange rate between the Euro and U.S. Dollar may result in significant foreign currency exchange gains or losses. We fully repaid our Shareholder Loans (principal plus outstanding interest) using a portion of the net proceeds from our initial public offering.

 

To reduce our foreign currency exposure risk, we hedge our foreign currency exposure in seven major currencies, including the U.S. Dollar and Pound Sterling. Our hedging strategy does not eliminate our foreign currency risk entirely and our hedging contracts typically have a duration of less than one year.

 

Recent Accounting Pronouncements

 

For detailed discussion on recent accounting pronouncements, see our annual consolidated financial statements.

 

LEGAL PROCEEDINGS

 

From time to time, we are involved in legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of legal proceedings and claims cannot be predicted with certainty, we believe we are not currently party to any legal proceedings which, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition. We also pursue litigation to protect our legal rights and additional litigation may be necessary in the future to enforce our intellectual property and our contractual rights, to protect our confidential information or to determine the validity and scope of the proprietary rights of others.

 

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