Mavi Giyim Sanayi ve Ticaret AS
IST:MAVI.E
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Mavi Giyim Sanayi ve Ticaret AS
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Ladies and gentlemen, welcome to Mavi's First Quarter 2021 Webcast Conference Call Webcast. I will now hand you over to your host, Mr. Cüneyt Yavuz, CEO. Sir, please go ahead.
Thank you. Hello, everyone. Welcome to our conference call regarding the financial results for the first quarter of 2020. The COVID-19 pandemic that began in early 2020 and impacted the whole world has created new challenges for all of us. From day 1, we started managing the social and financial impact of this health crisis head on. We will be talking about the impacts of the pandemic on our business and our internal response to -- responses throughout this presentation. Should you have any further questions, I will be happy to answer them at the end of our call.
Before going into the key highlights for the period, I would like to start off by summarizing our approach to the pandemic. I'm on Slide 2 right now. Protecting the health and wellbeing of our employees, customers and all business partners while also maintaining the company's financial resiliency has been our first and foremost priority. We have adopted all measures recommended by the local and global health authorities in all of our markets immediately.
In this context, we closed all retail and franchise stores temporarily and applied full time work-from-home schedule in the head offices. Our employee concerns are very important to us, and we immediately announced that their jobs are secure and all salaries will be paid in full.
I would like to give you a brief update on the current status operationally. In Turkey, all retail and franchise stores closed on March 19, 2020. Gradual reopening started on May 12, 2020, and all stores have opened as of June 1, 2020. Online operations in Turkey were also suspended on March 30 to increase health precautionary measures in the warehouse and resumed operations on April 17.
Internationally, all retail franchise stores also closed on March 19, 2020, and stores in Germany and Canada reopened in May. Stores in Russia started reopening on June 1 with 4 stores in Moscow. We expect all Russia stores to be open as of June 15, 2020.
Mavi.com, marketplace and wholesale e-comm channels in the international markets remained open throughout the first quarter.
In Slide 4, we highlighted our new health and safety measures as we resumed operations. As pointed out here in detail, we are using a new age nanotechnology antimic system for disinfection in order to achieve the highest hygiene standards in our stores, warehouses and headquarters.
Reopenings in each market are in line with local restrictions and rules on social distancing. Hence capacities of the stores have been remodeled in order to keep a 2-meter physical distance between customers and employees.
We are serving our customers with health protective materials, such as masks, gloves, face shields and are providing them with necessary equipment and hand sanitizers upon entering our stores. There are many more and detailed new procedures in place. And here, I would like to thank all our employees in the field for their devoted contribution to this process of creating a safe shopping experience for our customers.
I would like to summarize our initial responses on Slide 5. I believe that Mavi's strong risk management and low indebtedness policy as well as flexible inventory planning and a portfolio of in most seasonless products with jeans constituting roughly 50% of our business enables us to deal with and overcome the challenges in these difficult times.
When the virus outbreak was called out a pandemic by the World Health Organization in March, we immediately started taking necessary business actions. Initial and urgent actions were categorized under product inventory management, OpEx management and cash liquidity management. We have made adjustments to product purchasing plans in full collaboration with suppliers. Our jeans business has increased supportive both in the sense that the product is seasonless and also because we have a more dynamic and responsive supply chain.
As more than 70% of our current inventory is less seasonal, easily convertible into fall winter season, we have a longer shelf life to liquidate current fresh inventory. We have also outlined detailed category plans following the reopenings, targeting efficient sell-through and inventory management, enabling us to defend our gross margins.
In terms of OpEx, as stated earlier, all employees continue to receive full wage. We made use of state supports in all markets where available. The rents have been negotiated with landlords for 0 payment during the closed period, and we are negotiating new reduced rates as openings begin. Needless to say, all other noncompulsory OpEx has been cut, and we will continue to closely manage our expenses.
One of our most important priorities in this period was to manage liquidity. We have immediately deferred and scaled back the investments, deferred the immediate payments in agreements with business partners, expanded credit facilities extensively to secure liquidity. As you know, we have also canceled dividend payments from 2019 profits.
Having reviewed the COVID-19 impact and Mavi responses, now let's move on to Slide 6 with our key highlights. As of this quarter, I will be sharing the results, including IFRS 16 impact as reported unless otherwise stated on the charts. In the first quarter of 2020, our consolidated revenue decreased by 40% to TRY 387 million due to store closures. Nominal EBITDA for the period was TRY 20 million, resulting in 5.2% EBITDA margin. We have a net income of minus TRY 52 million. Store roll out plan has been temporarily paused due to COVID-19 conditions. The total number of monobrand stores globally, including franchises, stands at 432.
Turkey online sales increased by 49% in quarter 1 for the period it was open. Here, I would like to make a note. As you know, we normally share Turkey retail like-for-like figures in our earnings results. But with all stores being closed for almost half of the quarter, by definition there is no like-for-like set for this quarter. We will go back to reporting our like-for-like KPIs as soon as there is a meaningful set.
Moving on to Slide 7. Consolidated global revenue declined by 40% and resulted in TRY 387 million. Due to store closures, revenue channel split was significantly changed in quarter 1 2020 with 51% retail, 39% wholesale and 10% e-comm. We benefited from our solid e-commerce platforms. This quarter, online business has been the remaining growth channel with 41% growth globally despite a 3-week suspension.
Sales in Turkey were down 42% with 48% decline in retail and 35% decline in wholesale. This does not imply a difference in our performance. This is due to the shipment calendar, meaning that most of the wholesale shipments were done in the first half of the quarter. Our e-commerce business in Turkey grew by 49% in quarter 1 2020. International sales were down 34% in Turkish lira terms.
Moving on to Slide 8, let us focus on Turkey retail business. Before the COVID-19 outbreak, we had opened 1 new store and closed 3 stores. We had more store openings planned for the quarter, some of which had already undergone all preparation work but were deferred. No stores went through expansion in this quarter. As of end January, we have 312 own operated stores, totaling 136,000 (sic) [ 156,000 ] square meters of selling space in Turkey with an average store size of 499 square meters.
Moving on to Slide 9 to review category-based development. I know you will view these figures knowing that sales were closed for almost half of the quarter. Having said that, our denim, knits and t-shirt categories were all down around 50%; jackets, 30%; and accessories, 43% in the reported period.
On Slide 10, let's review our online sales performance as this was the only channel that could contribute positively to sales growth in this quarter. Recall that in addition to our direct-to-consumer sales that are reported under e-commerce channel, including mavi.com and marketplace, our customers can also buy Mavi products through third-party digital platforms to which we wholesale. Including the wholesale e-comm, our total online sales reached TRY 58 million globally and constituted 15% of total revenue in quarter 1 2020.
As you know, since 2019, we are moving our business model away from wholesale e-commerce in favor of the marketplace model. Hence, you see switches in sales between these channels. Overall, as one would expect, our online sales have grown in quarter 1 2020 and the share of online increased to 7.1% in Turkey and to 44.3% in international sales.
Let's move on to review our margin performance on Slide 11. As you know, we were targeting significant improvements in margins this year before the COVID-19 outbreak. In Q1 2020, we could only operate in February, which is generally a bridge month in which previous season products are sold with markdowns and then half of March where the new season product sales started picking up. Given an operationally weak period in hand, our gross margin ended at 45.7%, which is almost in line with the same quarter last year, eliminating the impact of high imputed interest rates. Although we took immediate and effective actions on OpEx management together with the pandemic outbreak, considering the compulsory OpEx items and full month cost of impact for the month of March has resulted in a significant increase in OpEx to sales ratio. As a result, our EBITDA realized at TRY 20 million with 5.2% EBITDA margin in Q1 2020 down from 20.4% last year same quarter.
As you know, we have expanded our credit facilities extensively after March in order to secure liquidity. Despite the higher net debt, our net interest-based financial expenses were lower this period. On the other hand, rent discounts received were reported as financial income within the context of IFRS 16 adjustments. Consequently, we have a net loss of TRY 52 million for the quarter.
I would like to move on to Slide 12 to take you through our working capital progress. To reiterate we had started spring summer 2020 season and have received the initial product drops to stores when we decided to close all stores on March 18. We continue to receive most of the remaining season products that were manufactured. Hence our inventory levels have increased. The good news is that the entire inventory consists of seasonal spring summer products, sellable through end of September with denim products being seasonless.
Consequently, our working capital as a percentage of revenue increased from 5% at the end of January to 8.8% as at the end of April 2020. Considering that the pandemic conditions will continue with gradually decreasing impacts, our working capital ratios may continue to be under pressure for the rest of the year. In the first quarter of 2020, our operational cash outflow in total was TRY 159.3 million.
Let's move on to the next slide, which is Slide 13. Although we have opened only 1 store in Q1 2020, we had undertaken some CapEx in preparation for the openings planned for the rest of Q1 and Q2. On top, we have the ERP transformation investments that are continuing as we speak. In this period, we have spent TRY 31.9 million of CapEx resulting with a CapEx to sale ratio of 8.2%, which should be normalizing as the revenue stream resumes. In order to be prudent in terms of liquidity management, we used an increased amount of bank credit since mid-March, most of which are still held as cash. Our net debt level increased to TRY 209 million as of end of April 2020. This implies a leverage multiple of 0.7x of EBITDA.
Looking into the currency composition of our debt, 18% of total consolidated debt belongs to our subsidiaries who all borrow in their respective local currencies. As of end of April, only 6% of debt is in foreign currency and is totally covered with foreign currency assets and receivables from subsidiaries. Therefore, we still don't carry any OpEx -- FX positions on our balance sheet as of today.
Moving on to Slide 14. I would like to provide some insights into the second quarter. As you recall, we have withdrawn our initial guidance in March. We choose not to provide a new guidance at this point with all the uncertainty ahead of us. Instead, we find it valuable to share with you what we are seeing in the market as of today.
As you know, all operations are up and running as of June 1 with service hours and capacity limitations. In Turkey, selected stores operated for only 9 days in May, which we believe does not form a basis for an outlook. So we want to share with you the performance of the same stores in the first week of June. We are observing that while traffic is down around 60%, conversion and units per transaction are up around 50% and 30%, respectively, resulting in same-store sales of minus 20% compared to last year. Our core product categories, denim and t-shirts, are performing strong. For the time being, [ street ] locations, which constitute around 20% of our sales, are performing slightly better than shopping mall locations.
I would also like to provide an update for e-commerce operations in Turkey. In the period from May 1 to June 7, total online orders are up by 5.5x with mavi.com being up by 3.5x and marketplace orders up by 10.5x.
Moving on to Slide 15. We would also like to provide as much insight as possible regarding how business is being managed. In terms of product management, our category planning teams are very busy targeting effective sell-through rates to defend gross margins. We are managing in-season orders even more dynamically with shorter lead times and effective open-to-buy planning. In terms of OpEx management, we continue to strive for additional cost savings.
Wage subsidies have ended along with store openings. We continue our rent negotiations targeting to preserve rent ratios. We have 6 new store openings and 3 expansions that are scheduled for quarter 2 2020. Most of the CapEx have already been incurred in quarter 1. Our IT investments and ERP transformation project continues uninterruptedly.
For improved health measures, we are budgeting an additional OpEx of TRY 7 million and additional CapEx of TRY 5 million for this budget period. Mavi's capability to manage change rapidly and effectively has served as the basis for the company's sustainable success for almost 30 years. I am confident that with our strong leadership and a team of more than 4,000 dedicated employees, we will be among the core companies that best manage throughout these difficult times.
Once again, I would like to thank all our employees, customers, business partners and shareholders for their continued support in helping us to continue to drive our business forward. With this final note, I am more than happy to take any questions you might have.
[Operator Instructions] Our first question comes from Cemal Demirtas, Ata Invest.
Congratulations for your actions during this period. Especially about your employees, you're very, very much respectful. I just want to congratulate you on that point specifically. And my question is about whether we are expecting an extension of this short-term working support -- hours support from the government after June. Or even in June, do you see any changes in those things? And you mentioned that you negotiated with your landlords. How successful you are in setting the agreements with them as a portion of your total the -- contracts? Just give an indication about that.
Thank you. Just to build on what you said, I am also feeling very proud the way we are treating our employees. And the good news is as they get back to work, I can see all the energy and motivation and the quality of service they are able to deliver to our valued customers who come and shop with us every day. And that energy is also transcending. And as I just shared, since the opening, I'm happy to see that we are delivering better-than-expected sales under the given conditions. And there will be, hopefully, a quick recovery to our total turnover.
And as Mavi as a brand and a trusted brand, that I'm quite confident that we will continue to win in the Turkish market as well as in all the other markets that we continue to serve. From the extension of the short-term working perspective, this is actually -- we did get the support, especially it was significantly important for us, for the retail staff who was out in the field. But as a total sum, it is not a major, major big number. It's around TRY 5.6 million for quarter 1, the total sum of support that we got. As we opened the stores, we have clearly walked away from that support. So we are not now benefiting from the short-term employment contract.
And at this point, moving on for the rest of the year, from our budget perspective, we are not counting on any -- in Turkey, counting on any further support from that front. Should there be a very unlikely shutdown or slowdown, maybe then we may come in and ask for support. But otherwise, as we have opened all the stores and we have brought all the team back to sales, I'm quite confident that as long as we keep the sales going, this support will not be required from us moving forward.
As for the landlords, the key -- I mean, key parameter ever since the process that we were going public and through the day since we became public, my comment on rent was that this is an area where Mavi will continue to win and deliver. And as an OpEx, it's an area we will be able to defend our position moving forward. I'm happy to report that during the period, we were able to not pay rent. And I'm also grateful to all our landlords who appreciate Mavi business and our good business partnership. And we have not paid rent and this has come through well.
Now since the opening, we are in the process of making sure that there is a reasonable ramp-up with the discount as business normalize. And for the rest of the year, if you want to model as Mavi, I mean, rent ratios as a percentage of sales should remain relatively similar to last year's performance. And that's what we are targeting.
And I'm also, again, since the opening, the way the business is going and also the contracts are being renegotiated, both with street locations and shopping malls, we are in a very relatively good business terms. And I am also, through this experience, given me the chance to also extend my thanks to our business partners in that sense for making this happen.
Therefore on the rent -- to sum up, on the rent portion, from a landlord relationship portion, I remain very confident and very positive, thank you.
Regarding the guidance, when do you think you will have some -- at least the picture that will lead you to give some guidance, maybe after June, or should we expect until the announcement of the following quarter's results?
I mean -- yes, at this point in time, we will do our utmost communications to our IR to give everybody a good sense of where the business is heading, so that you can also feel how we're running and continue to well manage our business.
If you ask me today, I don't think there will be an official guidance coming from us anytime sooner than when I announce the quarter 2 results. There's quite a bit of uncertainty ahead of us. And only by then I think will we be in a position to talk about what will happen because there's still a lot of unknowns ahead of us.
But in the meantime, I will -- we will as a team, do our best, as I've just done, to give you snapshots of cost, OpEx, CapEx, revenue, customer tendency, e-comm transformation to give you a feel that we continue to build our business and that we are in good shape.
Our next question comes from Mehmet Gerz, Ata.
Cüneyt, is Mehmet. Your online sales as a percentage of total in Turkey is quite low, 7%, compared to international percentage, which is 44%. Can you explain the difference? And also, can you give us a vision of where the retail business will be going from here, given what we have gone through in the last 3, 4 months? Have you changed your business strategy, or have you started thinking about changing your strategy in terms of channel, sales model and overall business?
Thank you, Mehmet. Overall, Turkey ratio of 7% of total business and growing strongly, as you can see, since May 1 because we did close the e-comm for a couple of weeks to get the warehouses ready and have all the health measures taken in the warehouses. But ever since we opened them, it's -- as you can imagine, and as I've shared, our total e-comm business is booming in Turkey, given the current conditions and the lockdowns of the stores.
But on a very macro level and, of course, vis-a-vis international, just to build on that, as we are a much bigger retail player in Turkey with more than 370 stores across Turkey, naturally, vis-a-vis the international markets, whether it's U.S., Canada or the European markets where we typically wholesale, the split of business is quite different. And there will, of course, be dynamics in the -- how business evolves across the next years.
From a strategic perspective, for almost now more than 18 months, in almost every quarterly call, I've been making a call out and sharing with you that we've been investing heavily behind the e-comm platforms, CRM setups, that we've been investing heavily behind our warehousing systems, delivery systems not only in Turkey but also in U.S., Canada, in Russia, in Germany, along with Turkey.
On top of all the investments that we've been going through, we've been investing heavily on our digital and IT infrastructure. Therefore, I think, it will be more of the same, this is what I would say, meaning we see e-comm and digitalization coming. Therefore, we will keep the momentum. We are future-ready. The channel itself is delivering good money and good profit for us. You will also recall that I've also said that if we were one-day all digital, we would be as profitable, if not more profitable a company. So in terms of channel trends, this is a very happy channel for us. We will only capitalize on the way it's moving forward.
In terms of retail, generally speaking, we believe that the current retail infrastructure in Turkey may slow down in terms of new store opening as one can imagine. But we -- again, if you know the Mavi numbers, we've been a very strong like-for-like company. So as things normalize on store -- same-store level, I'm quite confident we will deliver very good results. Even under the circumstances, the first 7,8 days of June indicates a very strong comeback. So retail will definitely continue to play a very important role in Turkey, while in international, the digitalization will continue. And in Turkey, although we're coming from a small base, I think it's 7%, [ 10, 12, 15, 20 ], it will continue to increase.
[Operator Instructions] We have no more audio questions. Dear speaker, back to you for the written questions.
Yes. [indiscernible] can read the questions, and I'll try to answer these questions.
This is from Ilya, BAML. Is it possible that you will modify expansion strategy somehow with less openings of physical stores and the shift to e-commerce, since it seems to be functioning very well?
Yes. It's a valid point, Ilya. I mean, we will definitely from an ROI perspective, CapEx and investment and return perspective, as I just mentioned, talking to Mehmet also, we will continue to invest and put a lot of resources behind digital. It is already a well performing channel, well greased up and very future-ready across all the countries and markets. Therefore, the short answer to that question is yes, and we will continue to put good focus behind digital. Moving on to the other question.
The next question is from Avaron Asset Management, from Rain. You said -- you mentioned that you paid no rent for the closed period. Was this a deferral or you don't have to pay for that period at all?
I will just be very clear. We did not pay any rent during the period when we were closed. We don't have deferrals. We will not be paying any rent for the period we were closed. Starting on June 1, moving onwards, we have renegotiated and we brought down the rent ratios accordingly down to lower levels to ensure that rent does not become an OpEx burden on our balance sheet.
He has an additional one. He says, do you see any risk for inventory [ write down ]?
This crisis, although not welcome, has come at probably a preferred time line, meaning we got into our product categories from a spring/summer perspective, all inventory that we bought in, in February and March. And also, as I mentioned, products did continue to come in that were being manufactured for April, May, and we brought them happily into our warehouses. These are all categories that we will happily continue to sell all the way through the end of September, early October. Therefore, if anything, we are doing utmost diligence, not to [ use silly ] markdowns , if I may say that, carry over the products at full plan and normal plan sell-throughs. And if anything, there might be a bit of conversion, meaning some of the products that might be excess which, if we maintain the current sales might not -- may become [indiscernible], we have yet to see into spring/summer.
But from an inventory perspective, from a spring/summer, what we bought in and what we will sell through, I feel quite comfortable. And again, just to reiterate, about half of our revenue comes from blue jeans. And these are -- blue jeans are typically seasonless categories. Whether it's in August or February, typical offtake is quite resilient and consistent. And it's also predominantly 100% manufactured in Turkey, and our speed to shelf is very fast with very good quality manufacturers behind us. And hence, from a denim perspective, I feel even more comfortable.
The inventory we have is very sellable. And any repeat orders we will make and any further manufacturing we'll be doing will be towards good happy selling and revenue contribution, thank you.
Okay. The next question is from Goldman Sachs...
[indiscernible]. Can you please move a bit closer, we cannot hear the questions. Thank you.
Okay. He is asking the gross margin outlook, what are you seeing in the market? As players reopen the stores, are there large discounts to clear inventory?
There is varying activities depending on the brands and categories. But from a Mavi position perspective, similar to what I mentioned in terms of maintaining rent ratios, from IFRS reported like-for-like mindset, we do hope for the rest of the year to maintain and defend our gross margins. Therefore, when I talk with my category and marketing teams, we are not, at this point, envisioning over and above markdowns to liquidate inventory. The inventory we have is good. Its quality is fresh. It's appealing. And the way it is being selling through, both on the Internet digital line and on the stores, is very encouraging. And we will maintain a reasonable and a solid sell-through activity for the rest of the year.
Okay. And then the next question is, can you please update on the international sales, especially the sales trend in U.S.?
All the markets. I mean, overall, international markets, as you know, came down in terms of volume similar to Turkey. Although it's a bit because it's wholesale driven, the percentage with which it came down slightly lower than Turkey as a percentage. But if you look at the phasing and so on, it is a similar closedown period that we went through across all the countries, whether it's Germany, Russia, U.S. or Canada.
The U.S. business is actually of all the international business is the best performing business, if not for anything, it's because it is the most digital and most progressive part of our business. And through this process, this e-comm and digital connections and customers we have has sustained the business. And as we are starting to come back to our offices and things are normalizing step by step, I believe the U.S. business will be a net positive contributor for the rest of the year moving forward.
We have our next question from Yavuz from PAAMCO. He says, when do you think Mavi could go back to last year's revenues and EBIT in Turkish lira terms? Is next year possible to beat or at least repeat 2019?
This is a $1 million question. On a normal current run rate basis, if you ask for the first weeks of indication of how business has been ramping up, my answer would be it would be easy for us to get back to 2019-ish kind of level in revenues next year. Should there be another closedown or certain other second wave and other uncertainties in the market, that we have to deal with. But generally speaking, I am very positive. I'm very bullish at this point in time. And actually, what we're trying to do is cherish every positive news and go after every single sales on a daily basis.
The next question is from Osman from Ambrosia Capital. He says, while it's maybe a bit early, are you seeing or do you expect to see material changes on the competitive front, both in Turkey and international markets?
Generally speaking, the industry -- apparel industry has a lot of inventory, and that's the $1 million question everybody is talking about. So that's the talk of the town, that for a couple of months where people were not able to sell quite a few of the apparel industry players have inventory problems and, hence, have to deal with where they are. From where we stand, I repeat, the inventory we have, the speed with which we can do replenishment, the open-to-buy management culture, the fact that 50% of our business is denim-centric, I believe it is less of a concern. It is still a challenge but it is less of a concern for me moving forward.
As I mentioned in the presentation, it will take us a few quarters in terms of getting the working capital ratios straightened out, but as we continue to sell -- and if we continue to sell at the rate we are selling right now, in quarter 3, quarter 4, we should see a normalized platform moving forward.
By the way, Goldman Sachs caller has a follow-up. He is asking, in U.S. what percentage of the sales are digital? Are you concerned with some wholesale partners closing permanently?
More than half of what we sell in the U.S. is in digital. And in terms of all the customers that we've been partnering, whether it's the specialty and department stores, we have not lost any significant customers, although there have been deferrals in terms of payment.
Just as we have been very good with our business employees in terms of salaries and relationships, we are taking very good care of our business partners in terms of making sure that their preferred choice of brands remains Mavi. And at this point in time, whether from a collection point of view or from a distribution perspective, we don't see major hits. How it will play out, down the line, a couple of months down the line, we will see. It also depends on how fast U.S. is pumping up the money to revitalize its economy and how fast the U.S. will be able to come back to a normal or a new normal. But we are closely monitoring. But as I said, generally speaking, U.S. part of the business is a part of the business where we are very proud of, and I'm very proud of the team and the work that they're doing there.
Our next question is from Maruf Ceylan from Q Invest. He's asking, will you reconsider the dividend decision if business improves more quickly?
The dividend decision for this year has been taken. Hopefully, next year, we'll get back to handling that and making the payments accordingly for the next year, but not this year.
Okay. So [ John ] from Franklin Templeton has a few questions. The first one is what is CapEx in nominal terms in your budget?
We typically allocated less than 5% of our spend on CapEx. And I think for the rest of the year, because we did have a ramp up in Q1, both on IT, which is one-off for this year especially and certain store openings for quarter 2, but moving forward, I think the CapEx ratio as a part of our total revenue will get back to its normal level what we've been reporting of being less than 5% -- 3% to 5% typically. Any other question?
Yes. The next question, do you think there is room to cut cash OpEx further especially?
The OpEx management will continue diligently Actually, as we speak, we're looking at what other costs that we can do away with. But currently, we've taken bulk of the measures that we could. Again, to reiterate, we will maintain and we hope to maintain our sales force and the head count through the period. But beyond that, we are looking at all potential travel-related, investment-related OpEx that is cuttable. Of course, we're looking into any further opportunities on a daily basis.
Let's wrap up the written questions. Maybe we can ask if after these questions the audience has any other questions. Otherwise, we can call it a day.
We have one last question from Berna Kurbay, BGC Partners.
I have 2 questions. The first one is about the e-commerce side. I noticed in this presentation that you provided contribution from marketplace versus mavi.com. And I was wondering if you have any preference between one or the other and in terms of how you allocate resources going forward in terms of profitability or in terms of reach? And my second question is about the inventory level. As of the end of April, the first quarter, you have over TRY 611 million -- TRY 600 million of inventory. Have you seen this level go up since then? Or has it started coming down off of a peak at the very least?
Okay. Let me start with the e-comm piece. From a marketplace/mavi.com perspective, both channels are profitable for us. The business is moving at this point in time more faster, as you can see from what I reported in the marketplace, predominantly because most of our business model is switching over from wholesale.com to marketplace.com operations.
Generally speaking, any and every brand prefers to have, or at least from a Mavi perspective, I should say, have the business on their own mavi.com or, in our case, our own mavi.com to grow faster.
But the reality is there are a lot of new "shopping malls" like Amazon, like Wildberries, like Trendyol like Hepsiburada that are emerging in every single market. And as Mavi, we have to learn to compete also in these multi-brand facets.
Therefore, it is for me, not a matter of whether I have a choice or not, it is a matter of how do I continue to build the businesses in both channels profitably, which, for the time being, I feel quite confident and bullish with the good brand, the good service and the good relationships that we have been able to build with these channels.
From an inventory perspective, I don't have the exact numbers in terms of whether the reported TRY 600 million has gone up. But my guess -- and I can come back to you and [indiscernible] and we will be more than happy to explain, is that the numbers will probably have gone up because this was end of quarter 1. There will be a bit more inventory that has continued to come through and then probably hitting a certain high in the end of April and then gradually coming down in May-June would be our normal cycle of inventory management. Thank you, Berna.
We have no more questions. Dear, speaker, back to you for the conclusion.
Well, thank you very much. Thank you for joining us in this quarterly update, and I look forward to joining all of you in good health with even better news on the quarter 2 update. In the meantime, my finance team, my IR team and myself, we are, as always, fully open to take any questions you might have. And we will do our best to keep you on the spotlight as to how we are best managing Mavi, and look forward to catching up with all of you. All my best. Take care. Cheers.
Thank you. This concludes today's conference call. Thank you all for attending. You may now disconnect.