Thanks everybody for joining us today. I'm Oliver Chen, T.D. Cowan's retail new platforms luxury analyst. Thrilled to be here with Martin Beer, the CFO of Lux Experience, and I've had the pleasure of knowing Martin for about a decade on this journey that we've all been on together for many reasons. Lux Experience has been exceptional in terms of customer engagement and top customer engagement as well. Okay, could someone close the doors too, if you guys don't mind. We're buy rated $8 on 23 times EV to EBITDA. As you mentioned, it's a great portfolio of brands, Net-A-Porter, Mr. Porter, Maitresa, and Ukes. We'll kick it off, Martin. You closed the acquisition of YNAP a little over a year ago, and you became Lux Experience. What does this platform look like currently? Where does the business stand today? We are in a volatile consumer environment and you have a big margin expansion opportunity exactly no
happy to start this off and the after lunch spot is always difficult but and you would agree that like experience is one of the stocks that has the highest value creation potential of of the of the companies that you that you're meeting today no let's talk about about you know what is whatever what are the segments of the group and and where do we stand the legacy is the my Teresa and most of you known it and we I put it I IPO did with with my Teresa and there's a lot of discussions on the customer my Teresa is really focused on the top customer on the top luxury customer so when we talk about the luxury market really need to understand that this is the top customer so four percent of our customers make 40% for 0% of the revenues so high concentration on the top and when we IPO it was I think 3% doing 30% so we are increasing the the top customer and my Teresa is focusing around three main you know value drivers the first is you know inspiration through curation focusing really on the top customers not so much transactional but it's really on the uninspiring through the creation and through very intense brand collaborations where we get you know exclusives and collaborations and pre-launches with the brands second is excellence and execution we have the highest net promoter score in the industry this was also always core of our DNA and the third is this community building very important for top customers very important also on the online with physical events and style suites and we we are enabling the the community building and that is very important for our top customers and that leads to the two cane two main aspects of why my Teresa has always been profitable even in difficult times and has a very resilience business model is first this highly loyal top customer base which come back you know without significant marketing or discounts it's a very strong focus on the top customers that also enables a very high full price share which is a key which is a KPI in our business and the second is the very high AOV over 850 euros that enables you gives you a lot of unit economics and that's why profitability for my Teresa was was key we acquired YNAB with the brands NetAppalty Mr. Porter and and Ukes and we wanted to do so to increase the relevance and and we we looked at the customer profiles and we only have a 10% customer overlap of my Teresa and that the party mr. Porter so very low overlap not a party mr. Porter is selling more through editorial content and brand discovery the my trees are customers more customer that knows around which brands she or he prefers and then goes through you know inspiration and and events so very low custom overlap that was the main reason for the for the customer acquisition obviously we are working on on the transformation the transformation is very much focused on SG&A we always called out and you mentioned that also in your reports they more than 1,000 basis points SG&A cost ratio difference this is driven by IT so we are in the middle of the IT replatforming that will end the beginning of calendar 28 and also simplifying and streamlining the operating model we have been closing warehouses in Dubai Hong Kong and passing the Clifton and New Jersey warehouse to the new operator of the old group, consolidating studio operations and customer care. So where do we stand today? You know, a group two and a half billion revenues, 40% is Maitreza, another 40% is Net-A-Porter luxury and 20% is use and we will finish the fiscal year with breaking even on the group level on my Teresa you saw that we already achieved a significant profitability improvement from the 4% 18 months ago now to 6% so we're right in the middle of increasing the profitability on my Teresa you also saw that my Teresa even in this very difficult quarter in this difficult industry setup is growing double digit you know 10% on constant currency that was quite remarkable and at the same time increasing gross profit margin and overall profitability we are now concluding this transformation year fiscal year 26 is the transformation year and are now focusing the group on growth and I guided that this quarter April May June we we expect to see growth not only at my Teresa but also at Nata party Mr. Porter and at ux in the next fiscal year so July to June fiscal year 27 and so the whole group will grow April May June and is set for continuous growth in fiscal year fiscally at 27 maybe last point on where do we stand we we finish the quarter with 436 million cash that's almost half of my market cap and and no debt no bank debt which is which is great and so we have a multi-year transformation plan that is fully funded and therefore we're in the great position to be the clearly undisputed you know leading global multi-brand digital luxury platform and have a clear transformation plan where we are right in the middle with significant milestones achieved and this plan is is fully funded and now we're
embarking on growth what is underpinning your enthusiasm for growth we have a sentimentally weak customer that's still spending and you have a healthy high-end customer but exactly geographically could you brief us on America's relative to to Europe and pockets of strengths or what are the major differences yeah I
I mean, the overarching trend, exactly as you call it out, is the top customer. And the top customer looks at the stock markets, looks at commodities, looks at real estate, maybe not in China, but everywhere else, and is happy and has significant wealth increase and therefore is also increasing our spend. and so the the the health of the top customer is stronger than a couple quarters ago I would definitely say that this is where you saw at my Teresa and last quarter so January February March and despite the March Iran conflict start we grew our top customers at my Teresa plus 18% 18% growth in our top customers that is quite quite remarkable driven also by the US so my Teresa grew in the US plus 33% on constant currency revenues and we've always been there we've always great grown as you know double digit but 33% is remarkable so US has been and will continue to be a strong growth contributor Europe is very stable and Europe is not Europe I mean there's huge differences between the countries as always southern southern parts of Europe are very strong Italy Spain Portugal a bit of France also Greece very strong now Eastern Europe countries Romania Poland very strong and then we have the classic non-performers Germany Austria Switzerland being a bit more difficult so Europe is not Europe huge differences but Europe overall is a great stable contributor it's around 55% of my trees revenues and and rest of world always always a mixed bag and the good thing for us is we can grow wherever we want to grow and we don't need facilities on the ground so very strong Korea has been very strong Singapore Australia Canada so rest of world and parts of Asia also very strong
China stays very sticky what's been the toughest part of the replatforming we have a lot of confidence in you to be able to do this given your consistency and track record but it's not easy can you do it quickly or what's what are the
next catalyst for this um I mean the core and why richmond chose us to do this was our IT platform because the IT platform is one of the you know also you know challenges that that XY and app had and they build up a very inflexible IT platform and so they they looked at my Teresa and looked at our IT platform and we had a similar IT replatforming program a couple years ago so we have the we have a great modular setup on shop checkout PIM order management system which which all is which is brand new it's our own only self-developed platforms and we have the team to do it and that's why the core of the transformation is the IT and that takes time we next month we will we will go live with our new ERP focused on accounting and controlling finance ERP and the whole IT replatforming will be finished in the beginning of calendar 28 so it's a trajectory IT focused and and on the operations we are much more advanced on the consolidation that I mentioned on warehouse customer care on and studio operation what will be the hardest part of the next six months I mean the the hardest part was always is always on the people side yeah that's for every transformation always you have to clearly identify and distinguish between people that are really motivated and willing to to change to to throw established ways overboard and that should be part of the team and you have to then also quickly identify those who are we're not we're not willing and capable to go that way. The next month is really set on growth because we, I mean, the transformation plan we're executing and we are fully in line with the plan and we spend a lot of time and the diligence of seeing, okay, what needs to be done and how to go about it. we are we're good we're good in execution we can do this right now with the newly established commercial teams leadership teams in the store they have adjusted the merchandising strategy the buy and the marketing strategy and they now have to we have to prove that we can grow from that base so the last quarter is not a party mr. Porter last quarter minus five percent on constant currency not a party mr. Porter so April May June I got it for growth and this will be the key focus area to really see how how we can translate the all the activities that the commercial teams have done into into growth refresh us
on where on your guidance I mean the past quarters have been relatively in line with some tweaks but where are you with the margin range of guidance and
also revenue I mean the we we guided for fiscal year 26 and overall stability of this I mean a very differentiated group very strong growth of my Teresa not a body mr. Porter also deliberate action to focus on the healthy core of customers not repeating the very strong promotional activities that they've done especially in the past quarter very much revenue focused not so much caring about you know the profitable promotions and that's why we didn't want to repeat that revenue is not the core logic for us ux also complete different logic defocusing on very costly and unproductive overseas sales so it doesn't make sense to you know to to to to send a hundred fifty dollar shirt to to a Japanese customer and cross-stock it in via Dubai it doesn't make sense and therefore we are focusing more on Europe and thereby also deliberate actions on focusing on the healthy core of the customer and therefore accepting revenue decline and they thought that's fiscal 26 is then the logic of having stability on the top line in the mix of those three segments and on the bottom line on the bottom line we reported the second consecutive quarter being profitable so q2 and q3 were profitable and one to end guided for fiscal year 26 also to have the break even on the on the bottom line also knowing there's huge differences in the segments and that's why we we talked about the my trees a heritage already six percent adjusted EBITDA profitability with one billion revenues and net opportunity Mr Porter there's no structural barrier to to also achieve a similar profitability with them and use is a more comprehensive restructuring and therefore we have to do what needs to be done break even of of ux will take 12 to 15 months on adjusted EBITDA profitability and we're seeing guidance and for in the next earnings call I will then more I will then talk more about fiscal year 27 and the longer-term outlook because the core aspect of our group and what what is our north side is to achieve the four billion revenues net sales at a profitability of seven to nine percent and that is also the reason why why we talked about value creation because if and we call this out for medium term this is around fiscal year 30 you know seven to nine percent adjusted EBITDA profitability at four billion revenues that gives you an EBITDA number if you multiply that with a multiple then then you clearly see the difference to my market cap today which
is around 1 billion yeah what's going on with having 400 million of cash what do you think people are not understanding as well as they could or should I mean
there's some technical reasons you're well aware of a very small float in the share so not that many shares are traded that keeps certain long only bigger bigger investors on the sideline that follow the story and are really supportive but see hey I want to build up a significant position that I cannot do and for the rest we have to continue to perform to deliver on the transformation plan and see how the the overall industry will continue to perform because we should not forget exactly as you as you said that the aspirational customer and most luxury groups sell bags or focus more on bags which which is more tuned to what's an aspirational customer and not like us we are ready to wear wardrobe building seller so we we we have a revenue share of 60% of ready to wear it's a very much different focus and that's why revenue of peers caring LV and others were negatively impacted and therefore this has to also then be visible to to certain investors to see okay I understand that the overall luxury segment is set for growth and will continue to perform yeah we have
had unprecedented creative change we've been in a quiet luxury moment but an expressive luxury is something you're watching across the whole portfolio of brands even though I always see you in the same outfit you're very consistent yeah so that is a testament to your execution too but what's happening now fashion in terms of quiet and loud and change is clearly Dior and Chanel are
making and Gucci yeah no it's there's a there's a lot of change in the last last months for example Pucci was was the most successful brand for us yeah wow
they're very small they're very small bread but you did the money can't buy experience with Pucci too yeah and yeah and the others I mean obviously you're
right I mean we we also have some event with and the as you always right we call it out the polarization in the luxury market continues so there are brands that are really strong performer when all the public illicit or non-public illicit brands are really performing strongly a lot of them are focused on high quality so more the quiet luxury part and other other brands are not not performing that well but as you rightfully call out with a lot of the signer changes the the inbound from brands to us continues to be even stronger because they want to reposition their brand a bit different and that is mostly easily done not to rely just on on people that come to your brand.com but they they do activities with us actions with us on as we are a multi brand platform and help them to expose the new direction then to a wider you know a wider target group and and therefore the the inbound from brands are very strong and the collaborations we do and the events as always so that really differentiates us and also it is a key sentiment to the high barriers to entry in this market because you have to build up a very strong relationship with those brands to clearly establish trust that you are doing the right things that you understand and protect their brand equity and therefore it's it's really you know giving a lot of confidence to see how strong and ever-increasing the brand collaborations are and that is kind of the flywheel as we always talk about because that attracts also a lot of top customers that are really building up their wardrobe and ready to wear focus because every week there's something new on on our platforms like an exclusive a pre-launch an event a marketing campaign and that attracts a lot of top customers and the brands see that and say okay I want digital exposure to to those customers I want I want to work together with you to have access to this because as the brands more and more also into this clientele mood to not just accept the typical aspirational customer that saves up money and then buys a bag every two years
Martin you also spent more time this quarter discussing AI including content search merchandising among others and a partnership with Google vertex where do you see AI creating the most value in your business I mean there's multiple
aspects to AI and I I think just at the starting point I mean it has been very much the focus and the most effective focus was in the last years on marketing effectiveness and efficiency this the self-learning algorithms that we implemented very early on on on really identifying the LTV over CAC really identifying what is the expected lifetime value of the customer and you talked about that earlier did you not really identify it before well I mean the you have to improve it and learn every because brass you know brands are very dynamic so everything that we sell 70 80 percent of what we sell did not exist last year so it's really the the the brands evolve and the customer evolves and therefore the LTV the lifetime by expected lifetime value is very very key for us and use you you mentioned that earlier we have the biggest database on luxury customers and we're also sharing information with the brands on on those multi-brand shopping behavior of certain customers so they learn if they relaunch certain products what are the price points that this customer bought before what what other products they buy this is also very variable but coming back to AI this this triggers to to accept higher custom acquisition cost for certain keywords and certain product selections and
certain paths and what was the most ironic example to you that you didn't
believe but it's true it is I mean the didn't see any surprises I didn't see any surprises it obviously it is it is true that a top customer not only buys low piano and one I also buy up different brands and we always take good care of seeing what is the best fit is this brand might be you know priced much lower but really really it's huge for towards the top customer but but the I mean even the the product the brand the product category the brand so like the bonello code or the lower piano or cashman sweater is really a very strong indicator of future lifetime value and the Alexander McQueen sneaker is not and so constantly evolving and so marketing efficiency and effectiveness has been the core of our AI use and that goes now to SEO search and agent-to-agent communication but in and we talked about exactly you called it out the in the past past quarters the focus on personalization real-time personalization the whole product catalog recommendations is a very strong is a very strong focus and the next months will have AI more even more focus on operational efficiency to really so for example the transformation on the IT side their AI will come more and more into place help on achieving additional cost savings and doing this also very on a high performance thank you open up the
audience for any questions feel free to raise your hand if you have any questions
question here I'll repeat it yeah all of us always pushing and saying you need
physical I just want to live it all with you together it's a high respect of
running a a big box or a small box store in a high street it's a different different execution and therefore what works well for us and you're completely right we have to amplify this this the service element although we are already doing a couple couple service elements and I can talk about this but the physical experience we are significantly increasing so pop-up stores remember not
how do you manage that cost or how will you think about you know occupancy relative to marketing as a percentage of sales I mean we 80% of our marketing
costs are performance marketing and we used to 20% what we call offline which is events and those pop-up and there's much more value in those pop-up events in aspen hamptons but also on the you know st moritz where we did three months also invite and and uh because i always look at the the customer cohorts uh that that went there that attended there and it's oftentimes bring a friend and uh it's remarkable it's remarkable to see those uh customer cohorts performing performing performing uh or in aspen when we had this uh après ski event it was remarkable that half of the visitors half of the people didn't know my Teresa that signed up I want to be I want to see this I want to be part of it so it's a it's a huge potential for us us and it also shows how small we are or how you know ample opportunity is for us to grow because if you if you do the math 800,000 my Teresa shoppers customers 4% top customers 32,000 worldwide and so if you have for example my Teresa a 23% u.s. share it's it's tiny and it shows how much potential there is on the top customer goal and to and to see not only growing the top customer also increasing the share then at the top customers so what's stopping you from doing more of
that just balancing the lattice margins this year it's execution it's on those
events and off price I mean we are doing a lot more so we this marketing is spent is increasing 30% so we're really investing there a lot but to really do this as always it has to be seamless it has to be excellent in execution and Also, a couple of brands are doing very successful events themselves, and therefore, the customer knows that as well, and so we have to be highly performing there.
You need to do a vote for TD Callen-Extel experience together, because you do have flawless execution. That does segue. Why do brands, should you just go to Gucci Direct, or should I go to MyTeresa? Why bother?
That's a very fundamental question. If you know what you want, you can go to Gucci.com. But we're catering to a customer that is driven on inspiration. She doesn't know what she wants. And, you know, at 11 p.m., a hardworking, mostly woman or a man, she wants to be inspired. I have the next two weeks, I have three events or I go on vacation. What should I look at? Help me solve the problem. and therefore together with what I said earlier every week there's something new an exclusive collaboration exclusive set of merchandise and we don't underestimate and you always emphasize it yourself that curation is very important and it's visible as visible to to other platforms as you do engage
Martin and saving and expanding profitability how do you make the right choices to make sure that your customer service is going to be excellent and you offer highly experiential experiences to it's it's also in the DNA yeah of our
company so everybody even in finance I have everybody who's also customer obviously customer facing knows the customer that we are catering for knows the importance really understands what does it mean a top luxury in every even the workers in the logistics center in the customer care in the in the studio operations everybody knows and understands that customer and that is the core rule for selecting where do I cut costs what do I do different where do I consolidate where do I keep it separate by by by segments or by stores to really understand this is really helping the customer experience and because this is a key differentiator remember highest promote highest net
promoter score in the industry which risk factors are you paying attention to most of course the geopolitical middle east conflict's been uncontrolled we've had a lot of uncontrollable risk factors exactly where would there be factors that could lead to downside or
upside to your revenues it's it's mostly and we both have lived through a lot of downsides in the last five six years yeah it's macro so i i'm not scared on on our ability to execute I'm not scared to deliver on the transformation plan and to grow. It is the macro and the effects. And who knows? Nobody knows what is expected. Is there further escalation in the Middle East? Hopefully not, but who knows? Is there escalation on the custom side? So it's macro. It's macro that worries me.
yeah okay and lastly which which part of the job has been the most fun for you
and how has it changed over the years I mean I'm I'm I'm not different than than than a lot of people driven by building something and having impact so to to build this new entity I mean we my Teresa and we bought this company which to double our size and to create a unified finance function and to always think about not becoming too corporate, to really stay small, entrepreneurial, fast, pragmatic, and to put this into the brains of everybody, that's a lot of fun. What are you putting in the brains of everybody? This attitude. What attitude?
To not be corporate. What do you mean being corporate is a bad thing?
corporate is a bad thing for us corporate is a bad thing that means long decision processes in every aspect a long decision process and so not to not act on yeah so yeah exactly be agile so it's so the difference is and being being entrepreneurial or being corporate that's how we how we yeah if life moves
fast yeah passes exactly you have to be and everybody wants the new thing yeah And lots of decisions are made by not making a decision. So thank you, Martin. It was lots of fun.
Thank you.