Operator
Greetings and welcome to the Lux Experience 3rd Quarter of Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. It is now my pleasure to introduce your host, Martin Beer, the Chief Financial Officer of Lux Experience. Thank you, sir.
Please begin. thank you operator and welcome everyone to the lux experience investor conference call for the third quarter of fiscal year 2026. with me today is our ceo michael klieger before we begin 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 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 IFRS 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 investors.laxexperience.com. I will now turn the call over to Michael.
Thank you Martin. Also from my side a very warm welcome to all of you and thank you for joining our call. We will comment today on the results and performance of the third quarter of fiscal year 2026 of LAX experience. We are very pleased with the results of the third quarter. We are making great progress with the ongoing transformation as a group. We achieved a GMV growth of plus 0.3% at constant currency in the third quarter, despite the outbreak of war in the Middle East in March. We also achieved a profitability at group level of plus 0.9% in adjusted EBTA margin, which is the second profitable quarter in a row. Finally, we achieved again significant improvements on many KPIs across all three business segments, underlining the successful execution of our transformation plan. We are fully on track and will achieve our guided results for the full fiscal year 2026. Our success story with our MyTeresa business continues, as we outpaced the market in terms of growth and further improved our profitability despite the geopolitical headwinds in March, which in the meantime have subsided for our resilient customer base. We also saw further improvements at Metaporter and Mistaporter driven by the new strategic focus on customer service, full price selling and cost discipline. At Juxt, Our strategy of focusing on the healthy core of the business and the good progress in implementing a leaner operating model continues to show clear results in line with our expectations. In addition to our guidance for fiscal year 2026, we therefore also confirm our medium-term target for the group with net sales of Euro 4 billion and an adjusted EBTA margin of 7 to 9 percent. And just to provide context for the Euro 4 billion net sales medium-term target, the most recent Bain and Altagamma report estimates the global online luxury market at 75 billion euros. Overall, Lux Experience is the clear digital multi-brand leader for luxury enthusiasts globally, and we are perfectly positioned to benefit from the sustained growth of digital luxury and the ongoing consolidation within the sector. Before reviewing the performance of the third quarter further, I also want to mention that we have successfully closed the sale of the set of assets powering the outnet on april 30th following the binding agreement announced last october we are very confident to have found the right new home for the outlet and we now are able to solely focus on our ux business in off price let me now comment on the performance of the my theresa business in more detail we are very pleased with the strong results in the third quarter of fiscal year 2026 which are fully in line with our expectations my theresa's clear focus on wardrobe building big spending luxury customers and their need through inspiration by curation highest quality service and community building with physical events drove against strong profitable growth our very resilient consistent business model and excellent execution allowed us to achieve this despite the headwinds from the outbreak of war in the Middle East. In Q3 of fiscal year 2026, MyTeresa grew its net sales by plus 9.9% on a constant currency basis compared to Q3 of fiscal year 2025. In the first nine months of fiscal year 26, net sales grew by plus 12.0% on a constant currency basis. In the United States, which is a key market for growth, net sales growth reached plus 33.8% on a constant currency basis in Q3 fiscal year 26 compared to Q3 fiscal year 25. In the third quarter, the U.S. accounted for 25.8% of net sales of our total Maitreza business. While we saw in the impact of the war in the Middle East on customer sentiment globally, we have already seen again strong growth in the business in the last weeks. This proves the resilience of our business model as our clients are globally mobile and dipped in sentiment are mostly short-lived. Mike Herrera's financial strengths and continued growth are driven by its outstanding customer base. In the third quarter of fiscal year 2026, the top customer base of MyTeresa grew by plus 18.6% compared to the prior year period. Furthermore, the average spend per top customer in terms of GMV remained quite stable with minus 1.5% in Q3 versus Q3 fiscal year 2025. The average order value last 12 months for MyTeresa increased by plus 12.5% to a record-high €847 in Q350-26, demonstrating the success of our focus on selling full-price, high-end luxury products to top customers. furthermore my theresa's gross profit margin grew by 240 basis points in q3 fiscal year 2026 which further underlines our successful strategy of full price selling lastly my theresa's customer satisfaction which we measure by our internal net promoter score reached 86.8 percent in q3 fiscal year 26 representing the highest quarter score in the last four years all these figures serve as a testament to the fundamental strengths of our mytheresa business our success with big spending wardrobe building customers makes mytheresa a highly desired partner for luxury brands in the third quarter of fiscal year 20 2026 we saw again many high impact campaigns and exclusive product launches underlining mytheresa's strong relationships with luxury brands we were the exclusive pre-launch partner for demna guasali's debut as creative director at gucci with the la familia collection for women and menswear we also pre-launched styles of balenciaga and Alaya's Runway collections, as well as of Saint Laurent's Summer 26 collection. We launched exclusive Runway looks from Loewe and Bottega Veneta's Spring Summer 26 collections for womenswear and meniswear. It is also very noteworthy that we launched the namesake brand of Phoebe Philo on our website in March. Please see our investor presentation for more details on these capsules and exclusives. In addition to creating desirability for our top customers with exclusive digital campaigns and product launches, MyTeresa also creates desirability and a sense of community for the top customers through unique money-can-buy physical experiences. Highlights included an intimate Valentine's Day cocktail my Teresa hosted together with Kate in attendance of the creative director Kate Holstein at Bammerman's Bar in New York. In Florence, my Teresa created a one-day experience with Gianvito Rossi for his namesake brand. Guests enjoyed a private visit to Palazzo Vecchio followed by a garden welcome and dinner at Villa Kora. Another highlight was an industry cocktail event in Shanghai that we hosted for executives and key partners from leading luxury brands at the iconic Spago Shanghai, reinforcing Mai Teresa's commitment to further strengthen its presence in the Chinese market. Finally, MyTeresa continued to offer guests a captivating experience at the Maison MyTeresa pop-up in St. Moritz. The setting brought MyTeresa's world to life through trunk shows, presentations, and workshops for invited guests. Please see our investor presentation for more details on these unique money-can-buy experiences. To sum it up, my Teresa delivered strong profitable growth fully in line with our expectations in the third quarter. We see this as further proof of the strength of our business model and consistency of our execution. Martin will later show how the strong top-line results translated into excellent bottom-line results. Let me now comment on the luxury segment comprised of Meta Porter and Mr. Porter. In the third quarter of fiscal year 2026, we saw continued improvements as a direct result of the new strategic focus on full price selling, cost discipline, and on customers seeking editorial inspiration and brand discovery. In Q3 fiscal year 2026, net sales declined by minus 5.1% on a constant currency basis versus Q3 fiscal year 25 for Netta Porter and Mr. Porter combined. In the first nine months of fiscal year 26, net sales declined by minus 1.6% on a constant currency basis. Europe, excluding the UK, increased by plus 4.3% in terms of net sales in Q3 fiscal year 26, compared to the prior year period. The overall net sales decline was driven by the ongoing strategic focus on higher value customers and the reduction of promotions compared to Q3 50 and 25. While we saw in March also the impact of the war in the Middle East on customer sentiment globally, we see again solid growth for Net-A-Porter and Mr. Porter in the weeks since end of March, thanks to the resilience of our customer base to such exogenous shocks. While the overall top line for Net-A-Porter and Mr. Porter combined declined in Q3 fiscal year 26, the average spend in terms of GMV per EIP, the so-called extremely important people, was quite stable, with only minus 1.4% in Q3 fiscal year 26 versus Q3 fiscal year 25. The average order value last 12 months again increased by plus 7.9% to 865 euros for Net-A-Porter and Mr. Porter combined. The gross margin increased by a high 700 basis points in Q3 fiscal year 26, driven by a higher share of full-price sales and significantly reduced discount activities versus last year's period. The customer satisfaction at NetAporta, measured by our internal net promoter score, has seen a consecutive improvement from 62.3% in Q1 to 65.3% in Q2 and now 68.1% in Q3, which is an increase by plus 890 basis points compared to Q3 50 or 25. The secret sauce of Lux Experience is clearly showing its effect. All these KPIs point to a significantly improved health and quality of the business of Netaporter and Mr. Porter combined. In the third quarter of fiscal year 2026, Netaporter and Mr. Porter continued to drive customer engagement through uniquely engaging editorial content and unique EIP experiences. Netta Porter invited VIPs, tastemakers, and EIPs to an exclusive three-day winter experience, including snow-thooing, stargazing, and evenings at a hidden speak-easy cabin in the newly opened one-and-only resort in Big Sky in Montana. During fashion month, Netta Porter celebrated New York Fashion Week with a dinner hosted with Willy Chavarillo. Attending guests included Julia Fox, Jack Harlow, Becky G, Tove Lowe, Lindsay Monteiro, to name just a few. During London Fashion Week, Netapolta partnered with Jonathan Anderson for a private tour of his brand new JW boutique exclusively for Netapolta EIPs. Moreover, MetaPorter launched its spring-summer 26 campaign, Le Virage, in March. The series of video-first vignettes, storytelling, and celebrating the new season's key fashion achieved a global media reach of over 64 million impressions. Mr. Porter featured exclusive interviews with Hollywood icons John Hamm and Kit Harington on the Mr. Porter Journal. Jon Hamm's story reached 2.4 million views on Instagram. A video story about Danish brand NN07 reached over 5 million views. Mr. Porter also created global EIP events, including a two-day immersive style suite in Hong Kong, a co-hosted brand dinner with bespoke shoemaker George Cleverley in Miami, and invited 10 guests to an intimate lunch hosted by Sir Paul Smith in London. Mr. Polter also launched exclusive capsules such as a 48-piece capsule with Brunello Cuccinelli. Please see our investor presentation for more details on Netter Polter and Mr. Polter's unique editorial content and exclusive events. In summary, the third quarter has seen further sequential improvements at Netaporter and Mistaporter, fully in line with our ongoing transformation plan for both businesses despite the headwinds from the war in the Middle East in March that, by the way, have already decreased significantly in recent weeks. Martin will later provide more details on the progress achieved in bringing the Neta Porter and Mr. Porter Luggery Segment back to profitability rather soon. Lastly, let me comment on Luke's performance in the third quarter of his year 2026. We are pleased with the progress of the ongoing transformation of Ux, including a focus on core countries and the implementation of a leaner operating model to better serve the lower margin and lower AOV nature of the off-price business. In parallel, Ux celebrated a brand rebirth with the successful launch of its new brand identity in line with its new strategy and positioning. In Q3 fiscal year 2026, net sales declined by minus 7.4% on a constant currency basis versus Q3 fiscal year 25 for Ux. In the first nine months of fiscal year 26, net sales declined by minus 8.9% on a constant currency basis. In Europe, excluding the UK, a clear geographic focus going forward, net sales increased by plus 7.0% compared to Q3 fiscal year 25. The overall net sales decline is mainly driven by the reduction of weight of overseas markets with high costs to serve, in line with the renewed focus on a healthy geographic core for the Ux business. While the overall net sales declined for Ux in Q3 Fiskear 26, the top spending customer average spend in terms of GMV grew by plus 1.3% in Q3 Fiskear 26 versus Q3 Fiskear 25. The average order value last 12 months increased by plus 1.7% to 247 euros in Q3 Fiskear 26. The gross profit margin increased by 620 basis points to 37.5% in Q350-26, as compared to 31.3% in the prior year's quarter, demonstrating the success of the new strategic focus on the healthy core. Yuke's customer satisfaction measured by our internal net promoter score reached 48.8% in Q350 year 26, increasing by plus 1,270 basis points compared to Q350 year 25, showcasing also the effect of the Lux Experience secret sauce on Yuke's customer service operations. All the Airbus KPIs indicate that the focus on the healthy core of the Ux business is bearing fruits. In the third quarter of fiscal year 26, Ux celebrated the rebirth of its new brand identity in line with its new strategy and positioning. Ux unveiled its future color scheme, proprietary layouts, and a renewed tone of voice in March. the rebranding has been rolled out on digital channels with full implementation including new app and website interfaces and offline packaging planned until the end of the year the brand rebirth story drove strong media coverage please see our investor presentation for more details on the new brand identity moreover youths leverage cultural moments across Milan and Berlin to create memorable experiences signaling the brand's rebirth. In Berlin, Jukes, together with Sleek Magazine, hosted an exclusive party during Berlin Fashion Week at the famous Borchardt Restaurant that seamlessly blended design, cultural relevance, and community. During Berlinale, Jukes challenged the imagination through a movie-inspired experience at the italian embassy party in milan dukes hosted its timeless brand events unveiling camerino a fitting room installation and new stage for self-expression creativity and reinvention the event brought together krols from the fashion industry and lifestyle media at palazzina apiani at the heart of Milan Fashion Week. During Milan Design Week, Jukes introduced El Camarino, unveiled by Keta Bard. The project was selected as one of the district's highlights and was introduced during the official press conference. All events boosted customer engagement through community building, delightful experiences, increased the guests' emotional bond with Jukes, and generated reach on social media and press coverage. Please see our investor presentation for more details on these events. To sum it up, the focus on a healthy core for Ux continues to show clear improvements in line with our expectations, and the brand rebirth of Ux with a new brand identity and new customer focus has only just begun. Let me now also provide you with a quick overview on the application and usage of AI at Luxury Experience as we have received questions on our approach to this technological seismic shift. For a long time, we have used intelligent algorithms to optimize our customer targeting and marketing spend based on predictive models for customer value estimates. With the revolution of generative AI, we have expanded widely the usage of algorithms to improve the customer experience with better and more personalized real-time content, such as product and newsletter records, on-site search, on-site merchandising, as well as product copy and imagery. We are live here based on our partnership with Google Vertex. We are also seeing huge benefits in software development to support our aggressive tech transformation roadmap at Netapolta and Mistapolta. We are constantly expanding the use case scenarios with a clear focus on improving the quality and accuracy of our customer experience. Please see our investor presentation for more details on the usage of AI at Lux Experience. And now, after having reviewed the very good commercial results and improvements across all our businesses, I hand over to Martin to discuss the financial results in detail.
Thank you, Michael. As Michael mentioned, we are very pleased with our strong results in Q3 of Fiscal Year 26, running from January to March 2026, despite headwinds from the Iran conflict. We again achieved a positive adjusted EBITDA margin at plus 0.9% in the quarter. This is a significant improvement from the minus 3.2% in the previous year Q3. Despite our focus on improving profitability with deliberately accepting lower sales at that Mr. P and Ux, we were able for the whole group to keep net sales stable in the quarter. The first nine months of the fiscal year, net sales grew by plus 1.6% on constant currency. I will detail the second performance a little later, but already want to highlight our continued success at Mitresa. There, we again outgrew our peers in the quarter with plus 9.9% net sales growth at constant currency, taking significant market share and boosting Mitre's adjusted EBITDA profitability by plus 50% compared to the previous year quarter. In addition to our continued success in strengthening our target customer relationships at all store brands, we also see that the cost initiatives in our transformation plan are working effectively. SG&A costs in Q3 are down minus 12% or minus 15.9 million. compared to the previous year period, including capitalized IT costs in previous year. Compared to previous Q2, just three months ago, they're down minus 8.6%. In line with simplifying our group structure and focusing our transformation efforts, we have successfully closed the sale of the Outnet end of April. we continue to diligently execute our transformation plan fully in line with our expectations and confirm our medium-term targets of 4 billion in net sales and an adjusted EBITDA margin of 7 to 9 percent i will speak later to our expectations for the full fiscal year 26 ending in june 26. i will first review lux experience performance at group level and then walk you through the performance of our three business segments, Luxury Mitresa, Luxury NetFOTE, Mr. Porter, and Offpress, business of Ux in more detail. In this call, I will focus top-line development on net sales. Our GMV numbers follow a similar pattern and are, as always, fully disclosed in our press release and quarterly report. Unless otherwise stated, all numbers for two euro in q3 of fiscal year 26 and at groove level we kept net sales stable in relation to q3 of previous year and despite deliberate focus on more profitable customer segments at nat mr p and ux and despite adwin from the irm conflict in the first nine months of this fiscal year Net sales grew by plus 1.6% at constant currency. On a reported level, net sales in the quarter declined by minus 5.2% given the wide euro-US dollar ethics movement since last year. For the full fiscal year, we continue to expect reported GMB at around 2.6 billion and net sales at around 2.5 billion euros. Our SG&A transformation initiatives are clearly visible also at group level. With significantly decreasing our SG&A expenses and despite lower reported top line, our SG&A cost ratio improved again in this quarter. Compared to the preceding Q1 and Q2 of fiscal year 26, the SG&A cost ratio decreased 360 basis points from 21.9% in fiscal Q1 and 19.1% in fiscal Q2 to now 18.3% in Q3 fiscal year 26. In Q3 of fiscal year 26, the adjusted EBITDA margin on group level was positive at plus 0.9%, significantly improving from the minus 3.2% in previous year Q3. This is the second consecutive quarter with positive adjusted EBITDA profitability. Due to the phasing effects between Q3 and Q4, we expect Q4 of the fiscal year to also be around Q3 levels of adjusted EBITDA profitability. For the full fiscal year 26, we expect to break even on adjusted EBITDA fully in line with our guidance of minus 1% to plus 1%. In the first nine months of this fiscal year, operating cash flow was at minus 117.9 million. We expect that the operating cash burn for the full fiscal year 26 will stay below this level. This is significantly better than our guidance of a minus 150 million maximum operating cash burn. As a reminder, we are executing our transformation plan on a fully funded basis with total cash outflow during all years of the transformation plan to range between minus 350 and minus 450 million we expect to break even on an operating cash level in around two years the group and is q3 of fiscal 26 with cash and cash financial investments are 436.1 million together with our revolving credit facilities our total available funds are at 612.8 million we are in an ideal situation to operate the fully funded transformation and our growing business model completely debt free let's now review the performance of our my trees of business during the third quarter of fiscal year 26 net sales grew by plus 9.9 percent on a constant currency basis to 256.0 million compared to the prior year period and the first nine months of the fiscal year net sales grew by plus 12 percent on reported numbers net sales grew by plus 5.6 percent in the quarter and plus 8.7 percent in the first nine months we continue to significantly take share in an overall stock market and with handouts from in the Iran conflict. For the full fiscal year and unreported numbers, we expect Maitreza to grow net sales by high single digit number. In Q3, Maitreza's gross margin increased by 240 basis points to 47.1% as compared to 44.8% in the prior year period. We were able to again significantly increase the gross profit margin with our continued focus on full price sales. This continued success on cost-margin level is even more impressive, as at the same time, we are capturing market share with significant top-line growth. In Q3 of the fiscal year, and driven by the new U.S. tariff situation, the shipping and payment cost ratio was up to 150 basis points compared to Q3 of fiscal year 25. As we pay all duties for our U.S. customers, the cost increase for us is reflected in our shipping and payment cost ratio. We are carefully monitoring and managing duty rate changes in the US. In Q3 of fiscal year 26, the marketing cost ratio decreased by 40 basis points from 10.1% in Q3 of fiscal year 25 to 9.7%. This is mostly due to a phasing effect between fiscal Q3 and upcoming fiscal Q4. We therefore expect the marketing cost ratio in Q4 to be higher due to promotion marketing cost shifting into Q4. The selling general administrative SG&A cost ratio decreased by 80 basis points to 12.2% compared to the prior year quarter due to continuous cost leverage. The low and manageable SG&A cost ratio at Mitresa has proven effective for the resilience of our business model. The focus of our transformation plan is to implement this resilience also at NatMrP and Subsequently, the adjusted EBITDA margin at MyTeresa expanded 160 basis points during the quarter to 5.5% as compared to 3.9% in the prior year period. In actual terms, adjusted EBITDA grew by plus 50% to 14.1 million versus the prior year For the first nine months of our fiscal year, the adjusted EBITDA margin significantly improved 190 basis points from 4.3% to 6.1%. On absolute terms, adjusted EBITDA grew by plus 56.6% to $44.5 million in the first nine months of the fiscal year. Due to the phasing of some costs items from Q3 into Q4, we expect Q4 to have a similar overall profitability margin of MyTeresa compared to Q3. We are continuing our effective inventory management with inventory levels at MyTeresa up only 3.1% compared to PU this year, despite continuous strong top line growth. Let me now comment on the luxury Net-A-Porté and Mr. Porter segment in more detail. In the third quarter of our fiscal year 26, net sales declined by 5.1% constant currency basis to 231.6 noting. In the first nine months of the fiscal year, net sales declined by 1.6%. This is a strong sequential improvement versus the same period in fiscal year 25. On a reported basis, net sales decreased by minus 11.7% in the quarter. The top-line decline was a deliberate action to focus on higher value customers and to reduce the promotion intensity compared to the previous year quarter. This is visible in the 700 basis points increase in the cross-profit margin. The cross-properable margin in Q3 of fiscal year 26 increased to 48.5% from 41.6% due to a higher full-press share and reduced discounting activities as compared to prior year. In the first nine months of the fiscal year, the cross-properable margin increased by 250 basis points to 47.3%. With growth in fiscal Q4, we expect net, Mr. P, to have net sales decline by only a mid-single digit for the full fiscal year 26. Our focus of our transformation plan remains on bringing down the SG&A expenses. SG&A expenses in the quarter decreased by minus 5.6 million or minus 8.9% compared to previous year. A strong decrease of SG&A expenses as well compared to the preceding quarter, which was fiscal Q2. SG&A expenses went down by 9 million or minus 13.7%. In the first nine months of the fiscal year, SG&A cost savings amount to 18.0 million or minus 8.8% of the cost base. All these comparisons include capitalized IT expenses in the previous year for better transparency on the true cost base. With re-embarking on top-line growth in the coming quarters, the SG&A cost ratio is expected to improve even further. The 23.4% SG&A cost ratio in this quarter compares to the 12.2% of Mitresa and signals the more than 1,000 basis points opportunity for us to achieve significant cost savings. We will continue to bring down this difference with adjusting the operating model, the IT replatforming, corporate overhead cost savings, and re-embarking on top-line growth. Warehouse closures are executed and the delivery models are being adjusted. Studio and customer care operations have already been consolidated the unified data platform is fully productive and the overall i.t re-platforming is being executed according to plan the layoff programs in all jurisdictions are now fully concluded but full effects to be visible in q4 of fiscal year 26 in sum our comprehensive turnaround plan until fiscal year 28 is being executed diligently and fully in line with our expectations. With a significant improvement in the cross-bottled margin, the net Mr. P segment again almost broke even in this quarter with an adjusted EBITDA margin at minus 0.5%. Therefore, also on bottom line, a significant sequential improvement from the minus 2.5% adjusted EBITDA margin in the first six months of the fiscal year. Inventory levels at NatMrP are slightly up, plus 2.8% the previous year. And going forward, we will continue to enable top-line growth at NatMrP with adequate working Let me now review the financial performance of the off-price business of EUX. In line with our transformation plan, at EUX we are focusing on the healthy core of the business, deprioritizing overseas markets with high costs to serve, discontinuing unprofitable marketplace model and implementing a lean operating model supported by a simplified off-price tech environment continuing the path of a more comprehensive restructuring effort at use and with focus on the profitable customer cores net sales declined minus 7.4 percent on a constant currency basis in q3 year-over-year to 130.7 million on reported numbers net sales declined by minus 11.4 percent this is a sequential improvement for minus 12.1 percent in the first half of the fiscal year same as in the net mr p segment the focus on the healthy core customer is visible in improvement in the gross profit margin in q3 of the fiscal year the gross profit margin in Ux increased by 620 basis points to 37.5%. In the first nine months of the fiscal year, the gross profit margin increased by 250 basis points to 38.9% from 36.4% in the prior period. The operational focus of Ux is on a fulfillment model that is profitable, creating a lean business model that's specifically tailored to the lower gross margin and lower AOV nature of the off-price business of Ux. In addition to lower duties and therefore reduced shipping payment costs, a core focus of our turnaround plan is to bring down the SG&A cost ratio also at Ux. The SG&A cost ratio in this quarter was at 22.0% of GMB, down from 26.9% in the previous quarter and 29.5% from Q1 of the fiscal year, and despite the significant year or top line. With this, the SG&A cost ratio in this quarter showed an improvement of 490 basis points compared to the previous two, and 750 basis points improvement compared to Q1 of the fiscal year. On an absolute level, SG&A expenses in Q3 of fiscal year 26 decreased by 10.3 million or minus 26.4% compared to previous year Q3. In the first nine months of the fiscal year, SG&A expenses decreased by minus 17.9 million or minus 15.5%. All these comparisons include capitalized IT expenses in the previous year for better transparency on the true cost base. and these cost savings were achieved despite the stranded costs from the separation of the outlet. We are significantly streamlining warehouse, studio, and customer care operations. The tech legacy cleanup and simplification is going well and with full speed. Corporate costs are trimmed down and aligned to a lean business model. And with a focus on healthy European targeted growth, the SG&A cost ratio will continue to decrease to the targeted levels. During the third quarter of fiscal year 26, the adjusted EBITDA margin improved from minus 17.3% in Q3 of fiscal year 25 to minus 5.5% in Q3 of fiscal year 26. The minus 5.5% in this Q3 was also sequential improvement from the minus 10.9% of the first six months of fiscal year 26, despite deliberate top-line contraction. With the execution of our defined transformation measures, we expect to return to adjusted EBITDA profitability of Ux in 12 to 15 months and return to top-line growth already in fiscal year 27. Inventory levels at Ux are minus 11% to previous year. In fiscal year 26, which will end next month in June, We're seeing exceptional growth at Maitreza, gaining market share with significantly improved profitability. NetMisterP is expected to break even in the second half of this fiscal year and is re-embarking on top-line growth as of Q4 of this fiscal year. NetMisterP and Ux are reporting improved gross profit margins and continuously improving SG&A expenses. Therefore, on group level and for the full fiscal year, we continue to expect reported GMB at around 2.6 billion and net sales at around 2.5 billion euro. On the bottom line, we expect to break even on the adjusted EBITDA, fully in line with our guidance of minus 1% to plus 1%. Same as last year, we will communicate our fiscal year 27 guidance in our Q4 earnings call. In line with visible success of our transformation plan, our trajectory towards our medium-term targets remain unchanged. We confirm our medium-term targets with 4 billion net sales at an adjusted EBITDA profitability of plus 7 to 9% and the return to 10 to 15% annual growth rates. We will continue our track record of diligently executing our plans and delivering what we target. And with this, I hand over to Michael for his concluding remarks. Thank you, Martin.
We are very pleased with our third quarter fiscal year 2026 earnings results. The third quarter came in fully in line with our expectations for the full fiscal year 2026 for the group. DAX experience has delivered strong results and is fully on track with its transformation plan targets for Netta Porter, Mr. Porter and Dukes. My Teresa continues to deliver profitable growth above industry standards, proving the strength and consistency of its business model. At Lux Experience, we possess the secret sauce in digital luxury, creating a community for luxury enthusiasts around the globe. As a group, we are perfectly positioned to benefit from the sustained growth of digital luxury and the ongoing consolidation within the sector, allowing us to capitalize on significant market opportunities. We will continue to generate significant value for our customers brand partners and shareholders as we reach our medium-term targets and with that i ask the operator to open the line for your questions we will now begin the question and answer session please limit yourself to one question and one follow-up if you would like to ask a question please press star one to raise your hand to withdraw your question press star one again.
Operator
We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Oliver Chen with TD Cowan. Your line is open. Please go ahead.
Hi, Michael Martin. Regarding revenue growth and what you're seeing. I would love your thoughts on the markets in the regions, Asia, U.S., and Europe in terms of key trends. And also, if there was upside or downside, overall revenues were a bit lower than the street. So your thoughts there as well as interplay with some of your comments on duties. And then there's a lot of geopolitical events happening, obviously. A follow-up question, Martin, operating cash burn better than you expected. It sounds like you're making a lot of outsized progress on the SG&A side, but what led to that? And as we look forward to EBITDA margins in the mid to high single-digit range longer term, what are your thoughts, given that you're making so much progress? It sounds like the fixed cost leverage is a big opportunity as you work towards the 7% to 9% adjusted EBITDA margins over the years going forward. Thank you.
Thank you, Oliver. Let me take the geographic question and then Martin can come back to the cash burn and the medium-term EBITDA margin expectations. So, in terms of geography, we see continued strength in North America, as evidenced by the almost 34% growth of Maytereza in that region. As mentioned or discussed last time in the quarterly earnings, Asia has seen sort of the bottom, and then there are little green shoots of improvements. and therefore we also continue to invest in the region. The Middle East was, particularly the Arabic Peninsula, was a very strong region and thus, as highlighted, the outbreak of war in Iran was clearly a headwind in March. We are very pleased to already state and observe that that dip has subsided. The headwinds have decreased. We are dealing with a very mobile global audience that is able to relocate and also the global sentiment that had suffered in March is fully back. So we see full strength since the beginning of the last quarter, but still it impacted the quarter, the Q3 we just reported on. In Europe, there are some very strong markets, particularly the southern markets in Europe where we see good growth Good influx of money, of a rich population, and that drives, of course, the demands for luxury products. So the strength in Europe, the solid strength in Europe, and the buoyant market in the U.S. is really, in terms of geography, driving our business. And as mentioned, the dip in the Middle East seems to have already gone away looking at the current trading. Martin, you want to pick up the other two?
Yes, I'm happy to ask that. Hi, Oliver. Operating cash burn, in the last nine months, you rightfully call that out, minus 118 million. Obviously, very much on Q3. As guided, Q3 typical seasonality cash out and also paying out most of the severance packages from the transformation plan of uh of the layout program also 700 people so as expected and q4 um we expect you know a slightly positive cash flow so we uh we clearly guide that um that the cash at the operating cash burn of 118 will be you know significantly lower to the 150 million which is which is great which is good news and it just shows our continuous focus on costs you saw that in the increasing gross profit margin diligently executing also the cost measures and we will continue to do so so there is a is a continuation of the diligent execution of the transformation plan which is the core driver of the operating cash burn in this fiscal year what we estimate to be significantly lower than the originally guided maximum operating cash burn of 150 million and then as pointed out the focus the continued focus on SG&A expenses and the SG&A cost ratio highlighted hopefully I highlighted that significantly in the call is also the key driver for achieving improvement in the adjusted EBITDA profitability. So for as we expect for this, you know, for the full fiscal year to break even, you know, we then, you know, every year will continue to see increasing adjusted EBITDA margins to 7% to 9% in the medium term, significantly driven by an improved SG&A cost ratio. And there is obviously one effect is the absolute reduction of SG&A expenses and re-embarking on top-line growth, which will also help on the SG&A cost ratios improvement.
Thank you. Very helpful. Best regards.
Operator
Your next question comes from the line of Anna Glaskin. with B. Riley Securities. Your line is open. Please go ahead.
Hi, good morning. Thanks for taking my questions. I'd like to follow up on the questions on the impact from Iran and geopolitical headwinds. Was there any one segment that saw more of an impact? And if you could unpack if that was related to regional differences and mix, or if it speaks to something within the core customer of that group? Thanks.
Well, I mean, the most impacted region was, of course, our customers on the Arabic Peninsula being directly affected by warfare, and we had a few days of no deliveries, but what is more understandably so, people were obviously occupied with different things than shopping. That direct impact has subsided slowly, but still the direct impact on the Arabic Peninsula is still significant. But what you always have to consider that our customer base is quite mobile, has multi-residences. So we have seen, of course, that customers from the region have moved to other locations. So we don't ship into the region, but we still serve these customers and other geographies. And then with any of these quite shocking and significant news, there is also a global sentiment dip of insecurity. That is and that has been the fact for all these unfortunate recent geopolitical events. That is often very short lived and seems to be also short lived here. So we did see a bit of hesitation in Europe, a bit of hesitation in North America after the outbreak of war. Again, fully understandable. Our hearts and feelings are with all people that are affected by this. But since April, except for the specific region on the Arabic Peninsula, we are fully back on track with strong growth.
Great. Thanks. And then turning back to the GMV per top customer at MyTeresa, I think it declined 1.5% in the quarter. Wondering if you could unpack that, and should we expect that to return to growth in coming quarters?
I mean, you have to really see that in connection with the massive increase of top customers. We really moved a significant cohort into this highest standard of our customer base. And as this sort of rejuvenates our top customer with a lot of new entrants, it is just mathematical that the average spent by moving so many new people into that higher status comes down a bit. I mean, it's quite stable and therefore quite remarkable that we move a double-digit higher number into the top customer status and the average only declines slightly. And as we then sort of, for better words, digest this massive increase in top customers, we will come back to the pattern that you have seen for many quarters now, that the top base continues to spend more each quarter per capita.
Operator
Your next question comes from the line of Blake Anderson with Jeffries. Your line is open. Please go ahead.
Hi, congrats on the nice results and thanks for taking my questions. I just wanted to ask one more to start out on the Middle East conflict. Have you seen any impact on the cost side from higher energy or fuel costs that we should be considering, such as shipping or logistics?
I mean, again, the rates and the quantity prices have been quickly fluctuating up and down. But yes, carriers, of course, pass on surcharges that particularly in air freight have been levied. So that is a direct measurable impact. But again, all of that with our business model has to be seen in context of on my Teresa and on Mr. Porter of average basket size of 850 euros. So the value of the products we ship let us quite rapidly mitigate those surcharges. Medium-term, longer effects we cannot observe. But that was a specific effect as soon as oil and combustion fuels have gone up in price.
Perfect. That's helpful. And then I wanted to just drill down on the MyTheresa U.S. business. second thing used to be really strong i know there's some industry um maybe tailwinds that you're experiencing there from consolidation but as we think about that 30 plus growth rate and you're looking out over the next 12 to 18 months how are you ensuring and planning for growth there and trying to sustain the momentum absolutely the the u.s market the u.s consumer is and has been for quite some time a growth engine for my tereza is also gross engine for the group and martin uh explicitly stated that uh marketing cost in the q4 will actually go up as we invest as we see
opportunities to engage with clients um we're gearing up for a fantastic event in in june in la hopefully uh uh the outbreak of wildfires are is not risking any of that we are returning to the Hamptons. We will have great engagement on the Netapulta side. You heard about the one and only Big Sky event in Montana. We're investing. We think there is, or we know and see and observe, there is an audience that is reorientating itself in a retail landscape that is changing quite dramatically, and we want to capture as many hearts and souls as possible at the moment.
Got it. That's really helpful. And then on the luxury YNAP business, I wanted to ask, you talked about pulling back on promotions and trying to have higher full price selling. How much more work to go is there? I know you mentioned that I think top customers are around 10% of total customers. Do you remind us your percentage of sales from top customers and where you're trying to take that over time and kind of what are the impacts we should see over the next few quarters from that strategic shift?
I mean, the good news is that we started this process last April as we took over the company. And so we are coming closer to having been fully in charge for 12 months and and and therefore with q4 uh a lot of that sort of promo detox will have been done so that that's the good news we we we stepped into right away we we we fundamentally think it's the wrong approach and therefore we immediately start stripping out those promotions and discounts And as highlighted in the call by Martin, the significant increase in gross profit margin in this quarter, because we were actually lapping a highly promotional quarter last year, which was effectively the last quarter under previous management. In terms of the share, we absolutely see it as the right target to have the same share of top customer business. And if you look into our investor presentation, top customer share of total customers in terms of size was 9.7 for my Teresa in that quarter that we just reported on and 10% for, sorry, was 9.7 for my Teresa and 10% for Netaporta. So we are getting there, and the famous 4% making 40% ratio is absolutely something that we aspire to deliver also for Net-A-Polta, Mr. Polta.
That's very Apple. Thanks so much, and best of luck for the rest of the year.
Operator
Your next question comes from the line of Wendy Gao with CICC. Your line is open. Please go ahead.
Hi, Michael and Martin. Thanks for taking my questions. As we can see, the AOV, I think, for all segments are going up, especially for the luxury and material segments. So, do you believe this is more driven by the increasing shares of top customers, or is it more structural changes, or any other reasons we should look forward to? Thank you.
Thank you for your question. There are multiple factors as always, and the ones you mentioned are right on. Higher presence of top customers, they buy into the higher price points, into the more valuable products, so that's one. But we have been quite successful over the last quarters building out our fine jewelry business. That's the fastest growing subcategory on both sides, actually, on Netaporta, Mr. Porta, and on MyTeresa. We've added, just in the quarter we just reported, Missika as a new fine jewelry brand. And so, of course, adding to the mixed pieces around 50,000, 80,000 euros has an immediate impact on the average AOV. So, the factors you mentioned contribute, but I just wanted to add that also increasing share of fine jewelry contributes to the ongoing increase in AOV.
Got it. Thank you. It was very helpful.
Operator
There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
