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Mytheresa Q2 Growth Slows as Occasional Customers Lose Confidence

Luxury online retailer Mytheresa saw second quarter growth slow as “aspirational, occasional” customers put the stops on spending during the key holiday period, against a backdrop of higher inflation and economic uncertainty.

In the second quarter of fiscal 2023, the online retailer known for its splashy customer events and selective tie-ups with luxury brands such as Pucci, Gucci and Khaite posted a 7.8 percent uptick in gross merchandise value to 215.9 million euros.

By contrast, GMV growth in the first quarter was 20.8 percent, while growth in the first half of the year was 13.7 percent compared with the corresponding period in fiscal 2022.

Mytheresa’s chief executive officer Michael Kliger said the company was happy with the second quarter growth, adding it was driven by “high-end, wardrobe-building luxury customers” rather than “aspirational, occasional luxury shoppers.”

In an interview, he said the latter, who dip in and out of the site and make occasional high-ticket purchases, “are more likely to be impacted negatively by an economic downturn. That consumer group felt the pinch. They were not willing or able to spend.”

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By contrast, Mytheresa’s top customer base is “as strong as ever,” with around 3 percent of big spenders regularly generating 35 percent of sales.

Kliger said that in the second quarter ready-to-wear, high-end ski wear, and fine jewelry sold well “due to the top customers,” while sales of handbags and shoes, key categories for the aspirational client, were less vibrant.

The second quarter was also impacted by the bumpy reopening of business in China following the lifting of restrictions in the region. Kliger described sales in China as “highly negative” in the three-month period.

In the second quarter, adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was 17.7 million euros with an adjusted margin of 9.3 percent. That compares with an adjusted EBITDA margin of 6.6 percent in the fiscal first quarter.

Kliger said he views the slowdown in GMV growth as “temporary,” and added that January and February were already showing improvement.

Unlike many digital retail leaders, Kliger said there are no layoffs planned. “The business model is working, and there is no need for us to fire anyone,” he said.

For the full fiscal year ending June 30 the company confirmed its previous guidance, although it said the numbers would be at the “lower end of the given range” for the top and bottom line.

As reported, GMV will fall between 865 million and 910 million euros, representing 16 percent to 22 percent growth, while net sales will range from 755 million to 800 million euros, representing 10 percent to 16 percent growth.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, will range from 68 million to 76 million euros, with an adjusted margin of 9 percent to 9.5 percent.

Kliger argued that Mytheresa has shown “excellent financial strength and resilience” against a backdrop of economic and geopolitical challenges. “That sets Mytheresa apart from other digital platforms in the same period,” he added.

A slew of digital retailers witnessed exponential growth during lockdown and hired to meet demand. They are now shedding jobs as customers return to physical stores, and against a backdrop of high inflation, rising interest rates and ongoing geopolitical crises.

Kliger argued that the Mytheresa business model was “resilient and agile” due to its diversification (it launched homeware last year), and its focus on full-price selling and personalized levels of service.

Earlier this month Mytheresa sought to underline its market position by dropping the word “fashion” from its marketing slogan. On the website, it now describes itself as offering “the finest edit in luxury.”

Kliger said the business is about more than fashion. “We’re selling Pomellato, we’re selling Bang & Olufsen and we want to be ‘the’ destination for luxury,” he said.

In the second quarter, GMV growth in the U.S. was up 12.7 percent compared with the corresponding period last year, with the market now representing around 17 percent of the company’s total GMV.

Mytheresa added that, over the last 12 months, its overall customer base has grown 10.1 percent, reaching 814,000 customers. The total number of big, regular spenders grew more than 25 percent in the second quarter, the company added.

Mytheresa also saw a 1.9 percent increase in the average GMV spend per customer. The company said the uptick shows the “quality” of its customer acquisitions.