MYTE MYT Netherlands Parent BV

Martin Beer Chief Financial Officer
Michael Kliger Chief Executive Officer
Kimberly Greenberger Morgan Stanley
Matthew Boss JPMorgan
Oliver Chen Cowen
Michael Binetti Credit Suisse
Geoffroy de Mendez Bank of America
Call transcript

Greetings, and welcome to the Mytheresa Fourth Quarter and Full Year Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's call is being recorded and we have allotted one hour for prepared remarks and Q&A. It is now my pleasure to introduce your host, Martin Beer, Mytheresa's Chief Financial Officer. Thank you, sir. Please begin.

Martin Beer

Thank you, operator, and welcome, everyone, to welcome, everyone, to Mytheresa's Investor Conference call for the fourth quarter and full fiscal year 2021. With me today is our CEO, Michael Kliger.

Before we begin, we would like to remind you that our discussions today will include forward-looking statements. Any comments we make about expectations are forward-looking statements and are subject to risks and uncertainties, including the risks and uncertainties described in our previous annual report. Many factors could cause actual results to differ materially.

We are under no duty to update forward-looking statements.

In addition, we will refer to certain financial measures not reported in accordance with IFS on this call.

You can find reconciliations of these non-IFRS financial measures in our earnings press release, which is available on our Investor Relations website at I will now turn the call over to Michael.

Michael Kliger

Thank you, Martin. Also from my side, a very warm welcome to all of you and thank you for joining our call today.

We will today comment on the results and performance of our fourth quarter fiscal year 2021, which thus also completed our full fiscal year 2021. There are three clear messages that I want to leave you with today.

First, the fourth quarter showed an outstanding result, completing an extraordinarily successful fiscal year for Mytheresa. We delivered, again, excellent growth and consistent profitability. This confirms, in our view, the unique position of Mytheresa in the luxury digital platform sector.

Second, our strong performance was neither based on the outbreak of the pandemic nor is it driven by the end of the pandemic. Surely, the pandemic was a catalyst for accelerated change and made the difference between the good and the not so good, more pronounced. But the long-term success of Mytheresa is based on a fundamental change of consumer behavior that has only started and a superior business model as evidenced by many of our performance KPIs. We view the performance of the last year as a strong affirmation of our superior value proposition for both customers and brand partners.

Third, we have actively used the last couple of months to build a very strong foundation in the business to continued and consistent future growth.

Let me now comment in more detail on these three key messages for today.

First, in the fourth quarter, we grew our net sales by 36.1% compared to Q4 fiscal year 2020; and for the full fiscal year 2021, by 36.2% over fiscal year 2020. This is significantly above our continued long-term guidance of 22% to 25% annual growth.

Our success as a curated luxury multi-brand digital platform continues to be based on a sharp luxury customer focus, strong brand partnerships and the focused profit-making business model. This is best exemplified by the fact that for the full fiscal year, we were able to deliver outstanding growth while keeping our gross profit margin stable at 46.9% for fiscal year 2021 compared to 46.7% for fiscal year 2020. In our view, this makes Mytheresa unique.

Second, our multiyear strength is evidenced by the two-year growth rate in net sales of 60.5% in the fourth quarter of fiscal year 2021.

Over the last four quarters, we have delivered two-year growth rate in net sales of 58.4% in Q1 of 60.4% and in Q2 of 66.1% in Q3 and now of 65% in Q4 of fiscal year 2021 over the corresponding quarters in fiscal year 2019.

While we benefited from the pandemic, we believe the fundamental drivers of our growth are the changing consumer behavior and luxury shopping and our superior business model compared to many of our competitors so that we could take advantage of the impact of the pandemic on consumer behavior. Based on the recent study by Bain & Company estimated that over 30% of the personal luxury goods spend will be online by 2025.

So while the shift of consumer demand for online in luxury has been significantly accelerated by the pandemic, we clearly believe this trend will continue probably at the lower pace in the post-pandemic world, but it will continue. Independent of new customers coming to us as stores were closed or existing customers spending much more as opportunities for going out and travel came back, we grew our net sales in all region in the fourth quarter of fiscal year 2021. The clear highlight was again the United States, where we grew net sales by 133.3% year-over-year in Q4 fiscal year 2021. All this affirms our belief that we offer a superior value proposition.

Third, we believe that we have achieved, again, many significant proof points over the last quarter that establish a strong foundation for significant future growth.

As explained before, our business focuses on a highly curated multi-brand offer attuned to the big spending, wardrobe building customer segment, which provides us with the best customer base in luxury and one that is very difficult to attract without a curated multi-brand offer.

We have significantly expanded our LTM active customer base by 38% year-over-year to now $671,000. This was again fueled by exceptional new customer growth. In Q4, we attracted over 110,000 new customers. In this context, it is good to note, we continue to see that all cohorts of new customers acquired in Q2 of fiscal year 2021 show better repurchase rates, also now in the fourth quarter, compared to the Q2 cohorts of fiscal year 2020 and their behavior in Q4 of fiscal year 2020. But most importantly, we grew our top customer base by 64% in the fourth quarter over the corresponding period in fiscal year 2020 and still the average spending of our top customers grew by 10% year-over-year in Q4 of fiscal year 2021. To further enhance our value proposition for our top customers, we launched an exciting partnership with Vestiaire Collective in Q4 of fiscal year 2021, offering a unique resale service for bags and soon also for shoes and ready-to-wear. The preferential service for our customers provides them with a very simple and streamlined process for reselling items, and they received immediate payment in the form of Mytheresa's store credits. A key driver for attracting multi-brand wardrobe building customers is our privileged access to exclusive products and pre-launches through our outstanding brand partner relationships. We were again honored with outstanding support and trust from our brand partners in Q4 of fiscal year 2021. We launched exclusive collections and styles as well as executed pre-launches with brands such as Alexander McQueen, Loro Piana, Jacquemus, Missoni, Brunello Cucinelli, Roger Vivier, Valentino, Christian Louboutin and many more.

We also ran our first beauty pop up on our website featuring key brands of Estée Lauder Companies in Q4 fiscal year 2021.

While we were still not able to execute many physical events in Q4 for our top customers, we still had high-impact events in Beijing and in Paris in collaboration with the Centre Pompidou.

Another exciting development in terms of brand relationships is the innovative evolution in how we collaborate with some major brand partners going forward, which will allow us to further strengthen our unique value proposition.

Another so-called curated platform model, we will closely integrate with the retail operations of some of our own brand partners. This means that we will be part of the inventory management of the brand partner, affording us much better access to highly desirable product and in-season replenishment compared to today. This will be greatly appreciated by our customers.

Our control over the assortment building, marketing and customer relationships will not change vis-à-vis today while our capital efficiency will improve. The inventory remains in the ownership of the brand partner until it is sold by us to the Mytheresa customer.

We will, therefore, book under this model, a platform fee as our nails going forward. This model will already start to become operational in fiscal year 2022 with some key brand partners.

Finally, we demonstrated again in the fourth quarter the consistency of our operations and performance. We maintained business continuity across all operations with focus on health and well-being of all Mytheresa employees as the top priority. This highly correlates with the very high customer satisfaction measured internally with a Net Promoter Score of 85.6% in Q4 of fiscal year 2021. The health of our business was also demonstrated by our stable gross margin in the fourth quarter on the basis of a high full price share and little dependency on promotional activities. With all the above, it should come as no surprise that we are very proud of our achievements in fiscal year 2021 and extremely confident to continue achieving strong results in fiscal year 2022. And now, I hand over to Martin to discuss the financial results and guidance in detail.

Martin Beer

Thank you, Michael. I will now review the financial results for the fiscal fourth quarter and for fiscal year 2021 and we'll provide additional detail on some of the key topics previously mentioned. Unless otherwise stated, all numbers refer to euro.

As Michael highlighted, we are very pleased with our performance during the fourth quarter clearly above expectations, where we delivered strong net sales growth due to robust new customer growth and strong existing customer cohort performance. With our proven business model, we could scale significantly in the fourth quarter without any compromise on the quality of our profits.

During the fourth quarter, net sales increased by $43.1 million or 36.1% year-over-year to $162.4 million.

We continue to see strong customer engagement and retention as our active customers who shop with us in the last 12 months grew by 38% to 671,000.

Now our total orders shipped in the last 12 months increased by 37.9% to €1,505,000. Cost of sales increased by €21 million or 32.7% and compared to the prior year period, driven by our strong growth in total order shipped.

As a percent of net sales, cost of sales decreased slightly at 52.3% in the fourth quarter compared to 53.7% a year ago. Gross profit of €77.4 million was an increase of $22.2 million or 40.1% year-over-year. Gross profit margin of 47.7% improved by 140 basis points compared to the prior year period of 46.3%, driven by our continued higher level of full price sell-through.

For the full fiscal year 2021, Mytheresa achieved a gross profit of 287 million, an increase of 36.7%, compared to the fiscal year 2020. The gross profit margin for the full fiscal year 2021 was stable at 46.9% compared to 46.7% in the full fiscal year 2020. The sustained stability in our gross profit margin over the last four years underlines our unique high-end positioning in the market and our ability to achieve a strong top line growth without compromising our customer quality. In Q4 of fiscal year 2021, adjusted EBITDA was at $11.2 million, and adjusted operating income at $9.1 million. Q4 of the last fiscal year 2020 was heavily affected by some special temporary one-time effects, mostly related to COVID. These effects drove the adjusted EBITDA margin to a one-time high of 12.6% in Q4 of fiscal year 2020.

If you did not consider these temporary effects, the adjusted EBITDA margin would be at 6.6% in Q4 of fiscal year 2020. These effects relate to marketing costs and SG&A. Due to the early stages of COVID in April, May and June last year, we cut performance marketing costs, and we're not able to host any of our scheduled events. Therefore, the marketing cost ratio was about 400 basis points lower than what was expected at that time and what we had seen in the preceding quarters of last year.

In addition, in SG&A, we had IFRS accounting effects in that quarter and other COVID-driven effects. These amounted to 200 basis points lower cost in SG&A.

So in total, we had in last year's quarter, 600 basis points of special and temporary margin increasing effects. In Q4 of fiscal year 2021, we achieved and reported an adjusted EBITDA margin of 6.9%. In this margin, 160 basis points of the one-time IFRS accounting effect and other pull-forward operating costs are included that are one-time by nature, but technically cannot be adjusted. These one-time effects of 160 basis points were not considered. The adjusted margin would have been 8.5%. And these 8.5% are in line with the 9% adjusted EBITDA margin that we achieved for the full fiscal year 2021. We therefore are very pleased with the reported adjusted EBITDA margin of 6.9% in the quarter and the resulting 9% adjusted EBITDA margin for the full fiscal year at the upper end of our guided 7% to 9% adjusted EBITDA margin. The continuous top line growth and strong profitability pattern underlines our unique positioning in the market.

We are very confident on sustaining the overall strong profitability levels. And later, I will talk more on the guidance for the full fiscal year '22, which is already coming close to the end of its Q1. Coming back to fiscal year '21, for the full fiscal year 2021, Mytheresa achieved an adjusted EBITDA of €54.9 million, compared to the €35.4 million in fiscal 2020 and thus representing a significant growth of 55.2%.

For the full fiscal year, the adjusted EBITDA margin increased to 9% from 7.9% in the previous fiscal year. Mytheresa achieved this strong increase in profitability also on adjusted operating income.

For the full fiscal year 2021, Mytheresa reported an adjusted operating income of €46.7 million compared to the €27.5 million in fiscal 2020 and thus representing a significant growth of 69.8%.

For the full fiscal year, the adjusted operating income margin increased to 7.6% from 6.1% in the previous fiscal year. If we look at the sources of this increase in profitability, and going through the P&L lines for the full fiscal year, we see a lot of stability, increasing efficiencies and cost leverage. We already talked about the stability in the gross profit margin, which is a key indicator for our continued successful positioning in the market. Then going down further in the P&L, we see a stable shipping and payment cost ratio at 11.7% for the full fiscal year 2021 compared to 11.5% in fiscal year 2020. The marketing cost ratio decreased from 13.9% in fiscal 2020 to 13.3% in fiscal 2021. Despite a strong 38% increase in active customers with a very good customer core performance compared to previous customer cohorts, Mytheresa was able to attract new customers at a lower cost. The strong online marketing performance is in line with the CAC decline that we achieved in the past four years. It is our stated strategy, to increase our brand building efforts by reinvesting the achieved cost efficiencies and online performance marketing. Due to the COVID situation, we could not execute our targeted level of PR and events.

Going forward, we intend to keep the total marketing cost ratio stable.

For the full fiscal year 2021, the adjusted selling, general and administrative cost ratio was at 12.8% compared to 13.6% in fiscal year 2020. Despite a ramp-up of public company costs, we achieved cost leverage and personal costs. The improvement in the operating performance is visible on adjusted EBITDA and adjusted operating income and also on adjusted net income level. Adjusted net income in Q4 of fiscal 2021 was €7.6 million as compared to €9.4 million in the prior year period.

For the full fiscal year 2021, adjusted net income increased 67% from €19.3 in fiscal 2020 to €32.1 million in fiscal 2021. The achieved margin of 5.2% in fiscal 2021 all the way at the adjusted net income level also shows the structural attractiveness of Mytheresa's unique business model. In the past years, we have always been profitable and have achieved strong growth with stable profitability.

As always, our adjustments are simple and straightforward. In fiscal year 2021, we adjusted IPO preparation and transaction costs, the one-time IPO share-based compensation and the finance expenses and our shareholder loans, which we fully paid back with parts of the IPO proceeds. All these items are clearly non-indicative of our core operating performance. In fiscal 2021, there were no additional adjustments on any other line in the P&L. Except for these clear and transparent adjustments, our financially reported P&L fully reflects our strong operating performance. Including these one-term effects and the expenses from the shareholder loans, the net loss of Q4 in fiscal 2021 was at €8 million and €32.6 million for the full fiscal year 2021. EBITDA, adjusted EBITDA, adjusted operating income and adjusted net income are non-IFRS measures.

Moving to the cash flow statement.

During the 12 months ended June 30, 2021, operating activities used €16.5 million in cash and cash equivalents primarily driven by a €77.9 million increase in inventories and strong operating profitability. The increase in inventories is in line with our exceptional sales growth and is in anticipation of continued strong sales. We ended the quarter in a strong financial position, with cash and cash equivalents of €76.8 million and total unused availability under the revolving credit facilities of €90 million as of June 30, 2021. Mytheresa has no liabilities to banks, an equity ratio of 74% and for its size, a solid cash position.

Turning now to our expectations for the current fiscal year ending June 2022. The past fiscal year 2021 has been an exceptional year for Mytheresa, strong top line growth and increasing profitability. COVID has only accelerated the prevalent and fundamental shift from off-line to online luxury shopping. All our customer cohort data underline the high quality of the customer influx in the last 18 months.

Our highest full-price share, strong sell-through and stable gross profit margin are visible KPI of this underlying trend. Mytheresa's continued high level of Net Promoter Score from new and existing customers is also a clear signal of an expected continuation of strong customer support. The high degree of loyalty and repurchase rates of customers are key driver of Mytheresa's ongoing strong top and bottom line performance. We built our expectations for fiscal 2022 on this achieved strong customer base for fiscal year 2021. The expected growth rate of our total active customers for fiscal year '22 is at 22% to 25% and therefore, in line with our long-term target of annual growth. And as stated before, this growth is on top of the strong already achieved active customer base of fiscal 2021. Michael already gave the highlights to our curated platform model or short CPM, which is an exciting evolution of our partnership approach for selected major brands.

For fiscal 2022, we will see the ramp-up of this adaptive platform model. The CPM allows us with the respect of brands to scale the availability of merchandise much more and even provide in-season replenishment, while Mytheresa continues to do what it does best, unique curation, engaging marketing content, superior customer rate.

We expect the CPM share to gradually increase over time, but Mytheresa will continue to also operate a wholesale business model.

We expect the CPM share in our business in fiscal here 2022 to be not higher than 20% of our total platform revenues. In the long-term, we expect that share to be not higher than 35% of our total platform revenues as we are now able to offer the right model for the right brands. The creative platform model is fully in line with our core focus on providing superior customer value through curation, content and service, but it also provides us better capital efficiency.

As the inventory under the CPM remains in the ownership of the brand partner until it is sold to the Mytheresa customer, we book a platform fee as our net sales.

We will therefore shift the focus of our top line reporting to GMV, our gross merchandise value, as an operating measure, which is fully in line with our strategy as it captures the total amount of merchandise that our customers transact on our platform, and that shows the full depth of our customer relationships.

We will, of course, continue to report also net sales as an IFRS reporting figure, but the most important KPIs in our business model are GMV, active customers, gross profit and adjusted EBITDA.

Our guidance for the full fiscal year 2022 is therefore GMV in the range of $750 million to $770 million representing 22% to 25% growth, active customer growth of 22% to 25%, enlarging the customer base to 820,000 to 845,000 active customers, net sales at €680 million to €700 million; gross profit at €345 million to 355 million, representing a growth of 21% to 24%. Due to our continued strong new and existing customer cohort performance, we expect the financial year 2022 to come out at the upper half of these ranges.

In addition, we also expect our adjusted EBITDA margin in the upper half of our long-term range of 7% to 9%. This will translate and might rise reaching zero profitability levels originally targeted in fiscal year '23 already in fiscal year '22.

On the basis of the clear and sustained market trends, our strong customer core performance and current trading, we are very confident to achieve these expectations for fiscal year 2022 ending in June 2022. I will now turn the call back over to Michael for his concluding remarks.

Martin Beer

Thank you, Martin.

We are delighted with the strong fourth quarter earnings results and the full fiscal year 2021 results. Both were above our expectations. We see ourselves perfectly positioned to take advantage of the short-term opportunities in the market, i.e., the increasing vaccination progress around the world, the strong shifts to digital and the better deliveries by brand partners.

We have thus provided a very strong guidance for the full fiscal year 2022. Even more importantly, we continue to see ourselves perfectly positioned to take advantage of the long-term opportunities in the market. We believe that the positive trend towards multi-brand digital platforms will continue probably at a slower pace than what we saw the last 12 months, but it will continue. Therefore, we continue to see strong growth of 22% to 25% per annum ahead of us with a stable EBITDA margin. And with that, I'd like to ask the operator to open up for your questions.


Thank you. [Operator Instructions] Your first question comes from Kimberly Greenberger with Morgan Stanley.

Kimberly Greenberger

Okay. Great. Thank you so much. And it's great to see the U.S. just continue to explode. I see revenue here in the first quarter or rather in the fourth quarter, up 133% on some pretty large growth last year. This is a sort of more recent let's say within the last year, focused geography for you.

So can you just talk about the underpinnings of the growth that you're seeing in this geography? And is it just a matter of having some local resources here in the U.S. that supporting the growth or what other factors do you attribute the U.S. performance to?

Michael Kliger

Thank you, Kimberly.

As always, when you have these exciting numbers, there are multiple factors. But one very important factor is what you already alluded to I mean we have put a team in place for the U.S. We hired Heather Kaminetsky, as our President for North America. We opened an office in New York.

We have a local team of personal shoppers for the last couple of months.

So, we are actively working on the market.

We have started to do events. We had already two events in the Hamptons, have engaged influences as we absolutely aware that one of the big hurdles for even further growth is brand awareness, brand trust because when people use our services in the U.S., we actually see very high customer satisfaction. And two other factors that are also, of course, driving this is that the U.S. has clearly turned into a very bullish consumer market. It's not only for us.

We also hear it from brands that the business is very hard.

So the U.S. consumer has again demonstrated their strengths in a turnaround in coming out of the pandemic. And finally, and the very important factor is that also in the U.S. as everywhere in the world, there is this ongoing shift of traditional luxury consumers to shop luxury online. And all three combined leads to this extraordinary growth that we currently see in the U.S.

Kimberly Greenberger

That's excellent. Thank you so much for that. And I just wanted to follow up on the SG&A in the fourth quarter. It looks like it's coming in about €20 million higher than we were looking for. It strikes me that one of those factors. It looks like the very largest factor might be stock-based compensation as a delta versus our estimate.

So I'm wondering if you can just dig into that a little bit more. And then looking out to the 2022 revenue guidance, I'm looking at the let's say, net sales growth, it looks like 11% to 14%. But if I look at it on a two-year basis, 23% to 25% compounded annual growth. This looks -- and compared to two years ago, let's say.

So you've got somewhat of a high base effect just given the extraordinary growth in fiscal '21 revenue. And then secondarily, you're introducing this -- the new partnership model, which could be converting some of the net sales growth into GMV.

So I'm just wondering if maybe you can talk to us about how you thought about the right revenue targets for the upcoming year and how you considered all of the factors as well. Thank you so much.

Michael Kliger

Maybe Martin can take the SG&A -- yes.

Martin Beer

Exactly. Yes. SG&A. I mean, clearly, as also highlighted in our presentation that in SG&A, we had in this quarter not only compared to the previous year quarter, but also in absolute terms, as you pointed out, in this quarter, some one-time effects. And I am speaking to the adjusted SG&A, one-time effects. And I am speaking to the adjusted SG&A, obviously, also in the press release and the numbers, the share-based compensation is adjusted. It's clearly transparent.

So if you take that out, we are on an adjusted SG&A base. And this adjusted SG&A base, we basically had two major effects that relate mostly to the 160 basis points that I referred to in my report. It is one-time effect of shifting IFRS accounting revenues to the next quarter. We changed that model due to our increasing share of international revenues. And that is in line with the higher past revenue recognition. That's about 110 basis points. And the second also major effect is an acceleration of the finalization of our ERP and HR platform change projects, so IT costs, mainly IT costs. We wanted to finish them earlier and they -- both ERP and HR platform change projects -- they're both are already successfully implemented in this Q1 of this fiscal year.

So this is on the SG&A side.

Michael Kliger

And on the revenue side, I think, velour absolutely correctly referred to. This is, of course, a factor of the base from 2021 and also the extend or share of the new curated platform model in our overall business. And as Martin explained, we will start in fiscal year '22 with this new model, allowing us to benefit from being integrated in the supply chain benefit means ongoing replenishment. Benefit also means, of course, much higher capital efficiency.

We are looking for fiscal year '22 that this new additional adaptive platform for big partners will not have a higher share than 20%. I mean we will gradually expand this as we really integrate into the retail operations of brands to execute this. And that share, of course, drives what part of business will run as curate a platform model on overall and to better have an understanding of that, we are guiding and reporting for fiscal year '22 on gross merchandise value.

As the total the amount of value that is transacted by our customers on the site because that really tells you how much business is done by our customers and depending, of course, how much gross merchandise value that is then that part is translated into a platform fee.

And so the net sales growth that you referred to, on the one hand, there is the base effect of an extraordinary good '21 business, but on the other hand, there's also the part of the business that -- where net sales is no longer the merchandise value sold on the platform but the platform fee booked.

Michael Binetti

Makes perfect sense. Thank you so much and congratulations on the very nice momentum here in the business.


And your next question comes from Matthew Boss with JPMorgan.

Your line is open.

Matthew Boss

Great, thanks. Maybe first could you just speak to the acceleration in customer acquisition that you're seeing maybe across cohorts? What are the spending trends that you're seeing from your top customers? Could you speak to spending that you're seeing from your new customers that have recently been a client? And then maybe just near term, any color on current performance quarter-to-date maybe just relative to that 11% to 14% revenue guidance for the year, I think, would be helpful.

Michael Kliger

Yes, sure.

So on cohort acquisition, customer acquisition, we continue to see that we acquire a lot of new customers.

So the customer acquisition side is very positive, again, in Q4, over 110,000 new customers. And we also continue to see good quality of these new customers.

So spend of the new customer of the new customers is stable, if not slightly even higher. The bigger story in Q4 was that our top customers are coming back with a vengeance. And that is, of course, tied to the opportunity to go out, the opportunity to go to occasions to red carpet events. I mean in Q4, we reported a 64% increase in the number of costs customers versus Q4 '20 and average spend going up by 10%.

So the new customer acquisition is very positive and quality number, but the really strong story underpinning our growth is that our best customers are spending more and more and that, we believe, is tied to now the opening up and the opportunity to buy because as we explained many times, our wardrobe building, high-spending customer, their needs are really occasion-driven, and not necessarily driven by a specific product. They have occasions to dress up and that drives their business.

In terms of current trading, I mean, what we can clearly say that the current train fully supports our guidance. We feel very comfortable. And again, it's very important to understand that in the model that we are now additionally to wholesale have in the platform, the key metric is how gross merchandise value develops because that tells you how much customers spend on Mytheresa.

As you go down, this is just the way how we book it and the guidance for the profitability remains 7% to 9%.

We expect based on the current trading that we are in the upper half of that.

So, we really believe that the key metrics to look at to understand the financial health of the business is how much merchandise is transacted on the platform.

So GMV -- and of course, what is the EBITDA that the platform reports. The current trading makes us very confident to again be 22% to 25%, even on the higher range -- on the upper half of that range on GMV, and 7% to 9% EBITDA even there on the upper half of the range.

Matthew Boss

That's great to hear. And then maybe just a follow-up on gross margin. Could you just speak to the drivers of the gross margin consistency for the past year? I think this has been a real key story line just given the customer acquisition that you've been showing and just the underlying drivers of your gross margin outlook as we think about next year?

Michael Kliger

I think you're absolutely right.

I think this is a key factor to understand why this business can achieve growth and profitability. And the fact is that we continue to acquire customers not based on promotions. The promotional share in our business has actually decreased over the last 12 months.

We have lucky seen in a business environment that for the last 12 months has been less promotion driven than what we've seen in the years before. But also internally, we are continuously focusing on the high end luxury brands. The high-end luxury brands are also very keen to have a distribution system where brand equity protection is key.

So I think the industry has used the dramatic change and dramatic shock of the pandemic also to realize what is key in luxury, what is important is brand equity protection and it is thus gross margin protection. And we are driving our new customer acquisition by excellent marketing, by highly targeted marketing on the back of using artificial intelligence algorithms, but we are not backing our customer acquisition based on promotional intensity because we know from the past customers that are attracted by promotions will only come back by promotions and then it's a downward spirit.


Your next question comes from Oliver Chen with Cowen.

Your line is open.

Oliver Chen

Michael, on the curated platform model, what are the main brands that we'll participate in? How do you see the EBIT mix or contribution trending over time given that it's a high-margin take rate? And what are just some principles of the arrangements in terms of the financial arrangements with the vendors? And how does -- what's the timing of this as well in terms of how you'll implement this over time? And if you have any thoughts on how geographically it will distribute as well? That would be great to know. Thank you.

Michael Kliger


So the curated platform model is a gradual evolution.

So we will start in fiscal year '22 with some major brands. It's not by geography, it is by individual brands.

So if we work on that platform with a brand that's immediately global. The arrangement is that we will no longer own the inventory. The inventory will remain in the possession of the ownership of the brand until we sell it to the Mytheresa customer, but we will continue to create so the inventory will sit in our warehouse.

We will ship from our warehouse.

We will continue to do marketing. And the real advantage for both sides is the close integration of the supply chain, the closer collaboration on marketing.

We are able to adapt to demand not only in terms of overall demand, but also in terms of specific product during the season as we are part of the toll inventory pool of the brand. That of course, tells you that this model meets certain IT capabilities on the brand side and also the ability to manage the supply chain. That's why margin, clearly stated. This is the right brand for some brands, and we have wholesale as the right model -- sorry, the right model for some brands, and we have wholesale as the right model for other brands. And we expect that this evolution will make an even more integrated approach with some of the bigger groups, bigger brands. We currently expect that medium term this may be 35% of the total revenue on our platform.

So this is a gradual step-by-step evolution and in terms of bottom line impact because it creates efficiencies because it allows us to work much closer and avoid spending money on things that don't work, it is not only on the top line accretive because we are access -- we're getting access to a highly desirable product and in replenishment. It is also accretive on the bottom line, but this is based because there's efficiency to be gained out of this.

Oliver Chen

Okay, Michael. And what's the framework for deciding what's most appropriate for curated platform model versus you actually buying the inventory and the CPM also will likely enable you to tap into a whole-wide array of brands and add to your assortment in a capital-light fashion.

So what's your vision for Evolution? And does that alter or give you opportunity to compete in different ways as this can unleash a big step change in what you're doing?

Michael Kliger

We are truly excited to also now have this additional model because, indeed, it allows us to offer to different brands, different solutions on how to be present in Mytheresa and speak to the Mytheresa customer.

So I see a great upside that there's not only one model, but there are different models for different brands. And the criteria is always that we discussed and develop these things jointly with brands and some brands feel that, that model allows them to work even better with us and other brands say that will actually the traditional wholesale model is perfectly attuned to our capabilities and our interest.

So, it is always mutual interest, but we firmly delivered opens up more opportunities for us as we have an additional model to work with brands.

Oliver Chen

APIs are pretty key infrastructure-wise as well as thinking about the seamless integration with the customer and speed and DCs. What are your capabilities technically speaking, as the infrastructure and also the proprietary relationship with each of the brands is critical by making this work?

Michael Kliger

This is based on IT capabilities. But to be very clear, we are starting in fiscal year '22.

So the capabilities are already in place.

We will start with the first brands already in fall/winter and then even more so with spring/summer '22.

So this is -- it requires additional capabilities but we have them in place.

Oliver Chen

Okay. And finally, inventory availability has been a big topic. What are your thoughts on inventories relative to sales? And did you have enough did you leave top line on the table given some industry constraints. And Martin, marketing costs and shipping and payments and freight costs in the quarter, how did those align versus your expectations?

Martin Beer

So, let me take deliveries compared to fall/winter '20 for winter '21 is a full swing back. I mean we are very well delivered on fall/winter.

We have seen good availability of product.

Of course, there are always best seller had sellers that you wish you would have more of. But overall, the industry has really recovered. And last year, as you remember, there was impact on the supply chain as production in Italy in March, April and May actually had to shut down but factories in Italy are fully back since July and August and have fully caught up. And our supplier base and luxury is really focused on Europe.

And so, we don't see any negative impact anymore on the supply chain and product availability, it very good. I would describe it as almost back to pre-pandemic levels.

Martin Beer

Yes. And maybe to the P&L, Oliver, I mean, yes, great observation. We finished the year with 9% EBITDA margin, and we guide the next fiscal year on the upper end of the 7% to 9%.

So if we look at the individual cost lines, we talked about the stability despite the strong growth, the stability in the gross profit margin. And if you look at the more technical shipping and payment cost ratio we were able to offset cost increases. And we also expect great stability there. There's nothing that we don't think that we can manage looking forward.

So we expect stability there. And on the marketing side, it is, as I said, the continuation of this trend of improving performance marketing cost ratios. But we want to reinvest those efficiency gains on the online marketing side into a brand awareness activities and PR events that we couldn't do so much fiscal. And that's why we expect the overall marketing cost ratio to be stable and SG&A, we expect a continuation of cost leverage.


Your next question comes from Michael Binetti with Credit Suisse.

Your line is open.

Michael Binetti

Hey, guy. Thanks for taking our questions and thanks for all the details today.

So with CPM, it looks like if we look through the guidance, you just as a layer of sales with higher gross margin. The 22 gross margin seems to be guided to about €51 to €52.

You did about 47% last year. I'm trying to understand with the EBITDA margin guided to the 8% to 9% range, it seems to imply OpEx, rough math, 43% to 44% of sales versus 39% in 2022 -- or in 2021.

So it seems like there is some costs coming into the OpEx line associated with CPM. Maybe you could speak to that a little bit, so we understand a little bit how it influences the P&L.

Martin Beer

If I look at the CPM effect of the P&L, and I think in this -- what I talked about in the earnings call, I mean, it's clear that we don't see any increase in the cost line items due to CPM.

So the CPM has this effect, as Michael outlined from a shift of GMV into booking the platform fee as net sales, such as a slower increase or a one-time shift effect from those brands GMV into net sales, but the overall GMV will grow strongly. The overall gross margin will be very stable. But in relation to the slower growth of the net sales, obviously, have an increase there. And all the other cost line items are in line with our stability and what we have seen in the successful past years because as Michael said, the CPM brands is just the ownership of the inventory. How we treat the merchandise. It does not change from the wholesale to the CPR model. We select, we curate, we do for marketing content, and we do the end-to-end customer service.

Michael Binetti

So thank you for that. I'm also curious.

You said this is an accretive program to the bottom line. If maybe what are some of the new headwinds to consider to EBITDA, I know we spent a bit of time on the tailwinds. But you pointed to the top half of the 8% to 9% EBITDA range that you had established previously, but we had two PM in which you described as accretive, and it sounds like you pulled some ERP costs into 2021 from 2022. Are there a couple of new takes for EBITDA that we should consider that maybe you didn't outline there? And then I guess I'm trying to understand, in the PowerPoint presentation, Slide 21. There's a brief comment there that you guys will control shipping costs associated with customer service, but you said the inventory for CPM goes from the brand's warehouse to the customers. I'm assuming is that just you guys are handling the shipping costs associated with returns? Is that what that means?

Michael Kliger

Yes, sorry, it was not well explained. The inventory is in our wells. Financial ownership is with the brand, but the inventory is in our wells that may have not been well explained the answer before.

Martin Beer

Exactly. And maybe to Q4, this was just this one-time effect in Q4. But bear in mind, I mean, for fiscal year '21, we grew our adjusted EBITDA by 55%. We achieved a 9% adjusted EBITDA margin, which is probably among the highest in the industry. And there -- we don't see any cost pressure we have to see any cost pursue we couldn't handle in fiscal year '21 and going forward in fiscal year '22.

So despite this effect and I described it in Q4, going forward, there's no cost pressure, especially not driven from CPM.


And your last question comes from the line of Geoffroy de Mendez of Bank of America.

Your line is open.

Geoffroy de Mendez

Yes, thank you very much for taking my question.

Just to come back on the CPM.

So look, if I understand correctly, the main reason why your sales are going to grow slower than your GMVs because you're going to increase the share of CPM towards something close to 20%. And then it says in the long term, you're going to go to 35% CPM share.

So should we expect the net sales growth to be slower than your GMV growth in the next, I don't know, two to three years? Because I understand GMV is important to understand your market share, but your net sales, is how your margins are calculated.

So if your net sales are growing slower than your GMV and slower than the guidance you used to have at the IPO.

Your EBITDA in euro terms will potentially be under pressure.

So just want to clarify on that front. And then second question, if we have the time. Any comments you can give on how the launch of VC has been with Estée Lauder, any comments on the impact on average basket size and cross-selling opportunities with fashion? Thank you very much.

Martin Beer

Yes. Thanks. Maybe on the first question, clearly showing the strength of the CPM model, with all the advantages that we talked about, so we really embrace of having the right model for the right brand. And the GM and shifting some those major brands, some brands from wholesale to CPM has this one-time effect of the net sales.

So, as you rightfully said, we expect that this year and some months, some period of next year coming to that range. And from that on that base, net sale will also grow, and we clearly outlined in the presentation, also have this 22% to 25% in the long run.

So it's more or less a one-time effect on net sales. And on profitability, I mean, you saw the clear guidance on gross profit growth of 21% to 24%.

So, you see that CPM is fully accretive. And again, we grew adjusted EBITDA 55%. We guide and we continue to guide to 7% to 9% in the upper half of that range and are fully aware of this strong profitability that we want to keep, and we will be able to show that strong profitabilit, despite the very strong growth on the top-line, attracting more customers to the platform and having the strong growth in GMV.

Michael Kliger

Yes, I mean, let me add. I mean, this combination of growth and profitability is and continues to be a unique feature of Mytheresa and digital luxury platform sector.

So, and we will continue to add that, so we don't see ourselves under pressure on the bottom-line, we see ourselves well positioned for growth and profitability. On beauty, you exactly outlined the right questions. And these are exactly the ones we're looking at with these pop-ups is this attracting the same type of customer that we have or as a brand new customers? Are these additional beauty products going into the same basket or do they create an additional basket, because that is exactly what we want to better understand, not only in terms of economics. But also in terms of operations and we will in the next or this current new fiscal year '22 continue to do pop-ups on beauty because we really want to understand the appetite of our customers and the operational requirements to do that as well, because we won't add any categories until we are absolutely convinced you can do it well. And our beauty, we're still in the face of understanding it, but there's great advertise by major of beauty brands to create pop-up with us.

Geoffroy de Mendez

Okay, thank you very much.

Just one quick follow-up, if I may, on -- I think someone already asked the question, but I don't know if there was an answer. Are you willing to give the take rate for the CPM part of the business? Or is it something you don't want to talk about?

Michael Kliger

No, these are commercial arrangements. We don't talk about individual commercial arrangements. The most important message is we will continue our EBITDA guidance as we have since IPO.

So there's no change in that.


All right, this concludes today's conference call. Thank you for participating.

You may now disconnect.