Mavi Giyim Sanayi ve Ticaret AS
IST:MAVI.E
Mavi Giyim Sanayi ve Ticaret AS
Mavi Giyim Sanayi ve Ticaret AS engages in the design, manufacture, and sale of ready-to-wear denim apparel. The firm offers pants, jackets, shirts, shorts, dresses, skirts, and joggers. The firm operates more than 390 mono-brand Mavi stores with particular presence in Turkey, the United States (following the acquisition of Mavi USA), Canada (following the acquisition of Mavi Canada), Europe (centered on Germany) and Russia, more than 5,000 global points of sale, as well as an online store. The company has a retail base in Turkey with more than 200 mono-brand retail stores, more than 60 franchise-operated mono-brand retail stores and more than 400 multi-brand points of sale across the country. Its wholesale partners include Nordstrom, Bloomingdale’s and Peek & Cloppenburg.
Earnings Calls
In 2024, Mavi achieved a net income of TRY 2.675 billion, a 7% increase year-on-year, with a net margin of 6.9%. Despite pressures from inflation and reduced consumer purchasing power, the company plans to navigate a tough 2025 by expanding retail presence with 20 new stores and 15 expansions in Turkey, and 8 stores in the U.S. Mavi forecasts low to mid-single-digit revenue growth, aiming for a 17.5% EBITDA margin when including inflation accounting. Excluding it, they expect a 35% revenue increase with a 20% EBITDA margin. Their strategic focus remains on quality products and enhancing customer loyalty.
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Welcome to Mavi webcast regarding the fourth quarter and the full year results for 2024. Before starting, I would like to kindly remind you to review the disclaimer on the webcast presentation and consider all forward-looking statements and comments in accordance with the cautionary statements under disclaimer.
In accordance with the Capital Markets Board, our financials are reported using IAS 29 financial reporting and hyperinflationary economies. The financial figures in this presentation and all comparative amounts for previous periods have been adjusted according to the changes in general purchasing power of Turkish lira in accordance with IAS 29 and are finally expressed in terms of purchasing power of Turkish lira as of January 31, 2025.
To enable investors analysts to conduct a full-fledged analysis, supplementary historical foundation are selected -- for selected key performance indicators is also provided. Please note that such supplementary figures are clearly identified and is made available only for information purposes.
Our CEO, Cüneyt Yavuz will be presenting the results now followed by a Q&A session. Lastly, I would like to remind you that this presentation is being recorded. Please make sure to keep your microphone muted throughout the presentation.
Now I will leave the floor to Cüneyt Yavuz.
Thank you, Duygu. Hello, everyone. Welcome to our 2024 full year financial and operational results webcast. 2024 turned out to be yet another challenging year, marked by headwinds in the macroeconomic environment that impacted consumer purchasing power and demand. Throughout this period, as Mavi, we continue to prioritize remaining a reliable and responsible partner for our employees, customers, business partners and communities while remaining focused on our long-term goal of maintaining a healthy business franchise.
Before we review our 2024 total year performance, I would like to take you through the strategic highlights of 2024, offering an insight into the key developments within the Mavi company. In a highly competitive landscape, it is our responsibility to ensure Mavi remains aspirational, a loved brand and preferred choice of consumers at all seasons.
In 2024, our primary focus has been on further elevating our brand positioning while attracting new customers as we have been consistently doing year after year. We based our approach to business, mainly on 3 strategic pillars: Firstly, our top priority is relentlessly offering the right high-quality product at the right price. In the context of Turkey's recent inflationary period, this commitment has been even more critical, serving as a key driver in building consumer trust and gaining market share.
Investing in and expanding our premium product segments is centered to our strategy to enhance brand positioning and enabling us to attract new customers to our wide range of product portfolio. In addition to our established premium lines such as Mavi Black Lux Black, Pro and Mavi Icon, this year, we introduced the Mavi Edition production, targeting the modern man with a premium style defined by a contemporary fashion code. This collection focuses on high-quality essentials and sophisticated smart casual products.
Our second strategic pillar focuses on reinforcing Mavi's positioning as Turkey's go to denim-centric casual brand. Our "The Jean is Mavi" campaign reinforced our leadership in the denim market showcasing Mavi's broad range of fits, styles and trends that cater to all customer segments from core to premium price points. At the same time, we continue to ensure that Mavi is the destination for casual lifestyle with Hero subcategories such as Basics, Logo and Polo t-shirts, sweatshirts and non-denim bottoms. Increasing the appeal of Mavi as a lifestyle brand represents the third and final strategic pillar.
Our collaborative collections, Wunder and Marche were key in attracting new customer groups. Wunder is resonating with a younger audience, while Marche has proven successful in attracting fashion-forward urban women. The Marche collaboration significantly helped our business in expanding our market share within the 25 to 35 age group of female consumers. Additionally, the growing Maviterranean collection reinforces the total look concept, further strengthening Mavi's unique brand story.
As a result of these focused strategic initiatives, we have seen a substantial increase in our top-of-mind awareness levels in denim, which have recently surpassed 70%. In other words, we literally own the heart and mind market share of the denim category in Turkey. Furthermore, we have successfully acquired a new record number of 1.5 million new customers in 2024, and gained market share across both denim and non-denim categories. We are dedicated to creating the Happy Smile customers, both in-store and online, ensuring the highest level of satisfaction. Our newly operated retail store concept, not only enhances the way we showcase our offerings, but also reinforces Mavi's premium brand perception.
Alongside this, we have redefined our retail organization and field operations model to align with a new service framework designed to increase operational efficiency and elevate the overall customer experience. We are confident that all these investments will be critical in increasing customer loyalty and continued business growth.
In the digital space, we continue to invest in UI, UX improvements across our online platforms. Key innovations introduced in 2024 include the jean finder, digital gift card, enhanced personalized search capabilities, expanded shipping and payment options and AI-powered Whatsapp chat feature. We are increasingly leveraging data analytics and AI-driven tools to refine and enhance our online shopping experience. This year, we shifted our focus beyond the linear customer experience approach to a comprehensive analysis centering around the total customer journey and life cycle. We initiated 360-degree customer monitoring and analysis, ensuring we listen to and deeply understand our customers through multiple chats.
I am also proud to share that Mavi was honored with the Gold Award in the ready-to-wear category at the 10th A.C.E. Awards, which recognizes exceptional customer experience based on feedback from 1.5 million customers. We continue to drive growth across all key areas of our business with a strong focus on retail expansion, online innovation and omnichannel integration.
In retail, we have seen an 8% increase in retail space with 16 net new store additions and 15 existing stores undergoing expansions. This not only strengthens our physical presence, but also enhances our ability to provide an elevated customer experience across all locations.
On the digital front, we are seeing remarkable growth in Mavi online. Our Mavi App now has 8 million active users, up from 5.7 million in 2023. This increase is a testament to the growing demand for our digital platforms. Mobile devices continue to be the key driver of digital sales growth, with 90% of traffic and 80% of sales. We are also expanding Mavi's digital footprint globally with mavi.com Turkey now reaching customers in the GCC and Europe.
Our omnichannel initiatives are delivering significant results. In-store online sales in nominal terms have surged 190% year-on-year, now contributing close to 2% of our total store revenue. These omnichannel efforts have driven nearly TRY 600 million of incremental revenue, reinforcing the power of our integrated shopping experience.
Click&Collect has also become a popular option now accounting for 10% of Mavi.com purchases. Additionally, we've enhanced the convenience by allowing in-store returns for online purchases, creating a seamless experience for our customers.
As part of our commitment to become a more data-driven organization, we've made significant advancements in our CRM strategy. In 2024, we upgraded our CRM approach with a new segment management model, now tracking and targeting customers across 8 segment models and 18 main individual segments. This enhanced segmentation allows us to tailor our marketing efforts more effectively and ensures we are delivering personalized experiences for our customers.
In terms of personalized engagement, we have taken a major leap forward. We have designed and implemented over 300 targeted campaigns in 2024, a substantial increase from 100 in 2023. These campaigns are designed to not only acquire new customers, but also to strengthen engagement and drive long-term loyalty. We are also advancing our understanding of customer behavior through customer acquisition and lifestyle analytics focusing on identifying the pathways that turn casual buyers into loyal customers. This is central to driving sustainable growth and enhancing customer retention.
The acceleration of our data-driven transformation continues with the integration of AI-Powered Solutions. We have launched the data analytics platform that supports our pricing strategy, utilizing price elasticity calculations and predictive analytics to ensure we're always competitive while maximizing margins. Our investments in product analytics are also designed to help us better understand and respond to customer and market expectations. We have implemented solutions to monitor consumer data sources and identify emerging fashion trends as they are emerging, enabling us to take speedy product introductions. Additionally, we are partnering with innovative start-ups while building our internal capabilities for data collection and AI-powered fashion trend forecast.
Finally, we are utilizing Gen AI-powered solutions to enhance the productivity of our support functions, such as finance, legal and HR. This is just one more way we're integrating technology to streamline operations and create efficiencies across the whole organization.
Mavi's strength lies in its people. I cannot highlight enough the quality of people working in our company. Clearly, I am very proud of the team we have. On the diversity front, 60% of our workforce, 52% of our management team and 50% of our Board of Directors' are women, reinforcing our dedication to equality. In 2024, we have launched the 360-Degree Feedback & Competency Assessment programs to enhance performance and leadership development and the 9-Box Talent Framework that assures effective succession planning for key positions.
Our Mavi Young Talent & Mavi NextGen initiatives will future attract and nurture future leaders.
At Mavi, we also prioritized community building. We are proud to be recognized as the #1 brand of Youth in future brands, understanding the youth research made in August 2024 with 20% of the respondents naming Mavi as their favorite brand. We are engaging in numerous community initiatives, such as in Indigo Turtles, Volunteer Camp, Mardin Bienal, music festivals, campus activities and building vibrant social media communities. Our Team Mavi Community remains a strong influence and we continue to make a positive social impact through projects like SosyalBen Skill Development Center, TEV Scolarship, Blindlook, Encander, and Miav & Hav initiatives supporting stray animals.
There are 2 major highlights in 2024 in the sustainability area that made us very happy. First, once again, we made the A list of CDP with an AA score on our climate change and water security reporting for the second year in a row. I commend my team for their dedication in making Mavi, a top-notch company when it comes to sustainability initiatives. The second plate recognition Mavi received was when we ranked 8 in Time Magazine and status list of world's best 500 companies in sustainable growth, placing Mavi in #1 position in the apparel industry globally. It is truly an honor to be crowned with this title globally.
In 2024, we have expanded our sustainable Mavi All Blue collection with two new additions: The Regenerative Jean Collection, crafted from cotton sourced through regenerative farming practices and the IMAGINED for Mavi Upcycle Collection created in collaboration with Murat Türkili, which extends the life cycle of Denim. With the contribution of these initiatives, the All Blue and better cotton product sales accounted for 27% of total revenue and 58% of total denim revenue in 2024.
Also this year, Mavi conducted its first double materiality analysis to more effectively define sustainability growth and integrate the potential impacts, risks and opportunities into sustainability strategy. We continue to work towards our net-zero goals in line with the size-based target initiative criteria. We initiated the circularity in Fashion project in partnership with Nivogo and in collaboration with Ecording, and with the contribution of our customers, we have contributed 50,000 seed balls to reforestation efforts helping to restore nature.
After this strategic recap, I would like to now start the view in our 2024 results. Our consolidated sales reached TRY 38.519 billion in 2024, growing 3% year-on-year. Turkiye retail sales grew 5% and Turkiye online sales grew 8% in the period.
EBITDA realized TRY 7.145 billion resulting with an EBITDA margin of 18.5% year-to-date.
Our net income growing 7% year-on-year, realized at TRY 2.675 billion with 6.9% net income margin.
With 1.5 million new customers, Turkiye active cartridge card members who shopped with us in the last 12 months is 5.9 million as of year-end.
Moving on to review our channel performance on Slide 12. The softness in trading environment continued in the last quarter with Turkiye Retail revenue contracting 1.4%. Turkiye online revenue growing 7% and bringing the total Turkiye revenue to 1% growth year-on-year in real Turkish lira terms in the fourth quarter. Total Turkiye sales grew 6% in 2024.
International revenue grew 5.8% in constant currency during the fourth quarter, finalizing the year with a 2.2% contraction year-on-year. The weakness throughout the year was primarily driven by demand weaknesses across some of our international markets, the cessation of operations of some wholesale customers and some transitionary warehouse and IT projects in Europe. The positive performance of North America business was the main driver of growth in the last quarter.
Looking into our Turkiye retail business in more detail. In 2024, in line with our extended targets, we opened 18 stores, closed 2 stores and expanded 15 stores in square meters in Turkiye, reaching 352 stores and 188,500 square meters total selling space. This is 8.5% increase in sales earlier year-on-year, which will be supporting our sales target in 2025.
In Turkiye, the retail sector continues to benefit from increased retail space driven by population shifts, the development of new urban areas and addition of new shopping malls. We take a disciplined approach to store openings, focusing on robust feasibility studies and short payback periods. I am pleased to share that all the new stores opened over the last past year have already delivered positive store contributions.
On Slide 15, let's elaborate on the like-for-like on our performance. In the last quarter, like-for-like sales contracted 3.9% in real Turkish lira terms and 3% in volume. In the year 2024, like-for-like sales grew 1.6% in real Turkish lira terms and 4.8% in volume. Including the new space contribution, total volume growth in the year realized at 8.5%.
Basket size grew 1% in real terms and close to 58% in nominal terms in 2024, reflecting effective pricing and increased units per transaction. We believe it is important to note here that the official clothing and footwear inflation in Turkiye was 27.5% in the year, much below the headline inflation.
Moving on to Slide 16 to review category-based developments in Turkiye retail. In 2024, all categories grew in a number of pieces, except jackets, which was softer this year, mainly due to relatively warmer weather in the season. Short, accessories and non-denim button categories were the main drivers of growth this year. Denim sales growth is 2% in the year and is balanced with the growth in non-denim bottoms category, which grew 25% year-on-year. This strong performance in non-denim bottoms was driven by rising demand for woven pants with Mavi proactively expanding its assortment to align with this trend.
Our knits business constituting of t-shirts, sweatshirt and jersey offerings grew 2%, and this is balanced with the shorts category, which grew 7%. In 2024, our new women's accessory offerings, including a wide range of handbags that received very well and contributed positively to our accessories category growth of 13%. Overall, in 2024, we continue to deliver market share gains in both denim and non-denim categories and strengthened our position among the top players in the apparel market in Turkiye.
Going forward to review our online sales performance on Page 18. Global online sales, including the wholesale business partners constitute 11% of total consolidated revenue in 2024. Online sales in Turkiye consisting only of direct-to-consumer channels grew 8%, driven by a strong 14% growth of Mavi.com and constituted cost of 9% of total sales in Turkiye.
Although marketplace sales have been somewhat softer this year due to reduced traffic, Mavi continues to be among the top 5 players in the jeans and T-shirt categories on both gender and [indiscernible] product.
International online contracted 18% in inflation-adjusted key figures in 2024. International Mavi.com is also a gross channel with 5% -- 5.4% growth on a constant currency basis. Online business makes up close to 32% of total international sales.
Now let's move on to review our consolidated financial results, starting with reviewing our gross margins performance. Since the second half of 2024, the decline in purchasing power and increased markdown communication in the overall market to stimulate shopping appetite has started to weigh on pricing environment, putting pressure on gross margins. Nevertheless, in the last quarter, our margins improved 120 basis points on an inflation-adjusted real basis. There is the 420 basis points lower impact of inflation this quarter versus same quarter last year. Our gross margin realized 50.3% in 2024, improving 210 basis points year-on-year, given 170 basis points lower impact of inflation adjustments this year and 150 basis points positive impact of imputed interest rate.
Moving on to Slide 21 to review our EBITDA performance. In quarter 4, the gross margin in growth was mainly reflected in the EBITDA margin. We have demonstrated a very disciplined OpEx management in the last quarter with OpEx to sales ratio deteriorating only 30 points despite our decision to execute a 25% midyear salary increase. We have closed the year with 18.5% EBITDA margin, well in line with our latest guidance revision and our long-term sustainable EBITDA margin outlook.
On Slide 22, we look into our net income margin performance. The impact of inflation accounting on net income result from balance sheet inventory inflation adjustments is significantly high in the fourth quarter, mainly due to higher inventory levels at the end of third quarter. With this impact, the net income margin that was 8.2% before the inflation accounting results with a 0.9% on a reported basis. TRY 82 million net income in Q4 brings the net income for the year 2024 to TRY 2 billion 675 million, growing 7% year-on-year. We closed the year with a net income margin of 6.9%.
On Slide 23, we will review our operational cash flow and working capital performance. Through dynamic product landing and a flexible sourcing strategy, we continue to manage inventory and working capital with efficiency, ensuring optimal resource allocation and operational agility. I am pleased to share that our inventory levels remain exceptionally healthy, comprised mostly of fresh spring/summer season products. Given the serious uncertainties, this accomplishment underscores the strength, collaboration and expertise of our multifunctional teams. We created TRY 6.3 billion cash from our operations in 2024 with a cash conversion ratio of 88%, similar to the very strong performance last year.
Moving on to Slide 24. In 2024, we invested TRY 1.430 billion in CapEx, resulting in a CapEx to sales ratio of 3.7%. These expenditures were primarily focused on store openings and expansions as well as digital investments and R&D. Most of the CapEx related to our new headquarters will be included in next year's figures. Our net cash position growth -- grew both in nominal terms and in real terms in 2024 to reach TRY 5.4 million. As always, the foreign currency debt reflected in our consolidated reports pertains solely to our subsidiaries, which borrow in their respective local currencies, thereby eliminating currency risk.
Slide 25 is a reminder of our targets for the year 2024 and their realizations. Recall that we have revised our guidance after third quarter results and delivered results in line with these revised expectations.
In the next page, we provide our guidance for the year 2025. The economic policies attempting to tackle inflation in Turkiye will likely continue to put pressure on consumer purchasing power in 2025. Navigating another challenging year, we will remain focused on what we can control and continue to invest our long-term strategy to remain a sustainable, profitable growth company.
We will continue to prioritize our platforming the apparel market, win with our customers love and loyalty for our brand, and to function in our respective duties with an overall commitment to operational excellence. Supporting our long-term growth aspirations, we plan to open net 20 stores and expand another 15 stores in Turkiye. We will also start our journey of retailization in North America this year by opening 8 retail stores in the United States of America, all in best-in-class shopping malls and premium locations. With that, we expect low to mid-single-digit revenue growth with 17.5-plus percent EBITDA margin on a reported basis, including inflation accounting.
Without inflation accounting, we expect 35-plus percent revenue growth with 20% plus EBITDA margin. We target to maintain our net cash position and spend 5% of revenue on CapEx. This CapEx figure includes the new headquarter investments and the CapEx related to store openings in the Europe.
Some final words as we do typically on this quarterly reviews with you guys on the current quarter and the trading environment. Recall that the first quarter of last year was extraordinarily strong. Hence, we are up against a very high base this quarter. Impacted by the severe cold weather conditions, the quarter started soft in shopping appetite in February with Turkiye retail sales growing 20% and online growing 41% year-on-year. With the weather getting better and the new season products arriving in stores, in the first 17 days of March, we delivered 42% year-on-year growth in Turkiye Retail and 61% year-on-year growth in Turkiye online. So as we stand, we look like we are set to deliver the results and the guidance we set out for this year.
And with this positive note, I would like to end my presentation. We'd like to thank you for all coming in and joining us in sharing this presentation.
At this point, I will leave the floor to Duygu and you guys. And if you have any questions, I'll be more than happy to answer them. Thank you.
[Operator Instructions]
My question is regarding the developments on February, the beginning of the year. Can you please provide further detail about the pricing dynamics? And how do you sustain that growth, whether through volume growth or through pricing?
Overall, we started February still at the very early beginning of the year. Actually, February is where we have the highest markdowns and new product typically arrives at the very back end of February. So net-net, I think what we are aiming for, as you know, there is around 30% inflation on our salary increase or cost ratio increase.
So when it comes to our pricing strategy, whether through product mix or pricing, we are aiming that we can at least negate some of the cost base increase by playing around and managing our product risks and costly in terms of getting to around 25% to 30% price increase. Of course, this is a ballpark figure.
We typically digest and segment all the categories, whether it's blue jeans, T-shirts, as well as I mentioned in my review, we are using our strategic pricing tools to assess the competitive market environment, because as you all know by now, and hopefully, that we are a committed brand. I mean, our brand committed to win in Turkey, and to be in sync the consumers' disposable income when it comes to their shopping capabilities and habits. Therefore, we are tracking things very sort of closely.
So February is probably not the best indicator. March, as I was mentioning, as more of the new products arrived, as typical, when we start the year, we're a little bit more conservative in terms of what the pricing and consumer appetite in terms of planning might be. But the first 17 days were quite encouraging, as I mentioned. So when the new products area, which were in the new price position. As you see, we are guiding more for a 35% plus growth, but the initial 17 names were more like 40% plus growth and 60-plus percent growth in e-com, which was extremely encouraging. We believe the portfolio, the newness, the freshness, the quality and the service levels will be key contributors to our success this year.
And success, by the way, I just want to take this opportunity to reiterate once again and maybe in my own words, that we see this when we do the guidance for this year, we are planning for a very -- one could say, defensive year, where we are hoping for the worse or planning for the worse. But hopefully, going beyond the expectations and we will bring better results through the year. And I think as Mavi, we have that capability. I think that mindset is going to be critical, especially in terms of OpEx management and working capital management and inventory management. We are blessed with being in Turkey, as I keep reminding you all.
We have the agility and flexibility to be quick to the shelf. Our tools, and as I mentioned in my presentation, AI digital tool, insights are making us even more up to speed in terms of catching the trends and being very fast to the shelf. So we believe this year will be another challenging year. But when it comes to pricing, cost, OpEx, et cetera, these I think we can handle and deliver against whether it's the local competitors or the international competitors, we feel, as Mavi, we will have the cutting edge again this year. I don't know if that answers your question. I'm more than happy to elaborate further if you have further questions.
We have a question on the chat screen. Let me read it. We have observed that Mavi has maintained a strong net cash position for an extended period particularly when viewed on a pre IFRS 16 basis. However, instead of utilizing this cash to generate financial income, a significant portion of strategically allocated discounted product purchases, effectively integrating into working capital and contributing to profitability and the income statement. Would you assess the financial advantage gained through this approach, especially when compared to alternative investment opportunities like money market funds?
Our primary focus at Mavi is to make sure that we are in the business of making apparel and offering the fashion-forward products and making customers happy in terms of selling our jeans, T-shirts, et cetera. So our focus is not on financials in that sense. Our focus is on getting the best product, best sustainable product, best quality, best fashion, base quality, best pricing into the hands of our consumers. .
Therefore, we put and we will continue to put because that's who we are. That's our competitive advantage, being able to service the customer with surprising them at the price, no doubt the quality, at the service level, at the experience level with a great product and great experience. And that's what makes them sticky to Mavi and ensure that they come back over and over again to shop with us. Therefore, our priority when we have the excess cash on the financial side is to use the money to make sure that we are booking the capacity, mitigating some of the cost in favor of the consumer and making sure that the consumer is happy shopping with the great products we have.
I would also like to take this opportunity, through this question, to remind all of you that with the cash position we have, we have reiterated that we would like to use this cash position and stay in a cash positive sense as much as possible in this high inflation and high interest rate environment. Therefore, having a bit of these resources makes us more comfortable and relaxed vis-a-vis the competition and also strengthens our hands in terms of the increasing cost environment for our sourcing partners where we can keep that business and our relationship running at a very healthy business streamline and ensuring that we get the right quality products on to our shelves when we need them.
Therefore, hopefully, over the next 18 months, 24 months as the inflationary pressures in Turkey subsides, and the government intervention and the termination to crack inflation settles in, we can also walk away from some of this cash position and go back to a normal financing instruments to fuel our growth. That would be my quick answer for that question. Let's go to the other question.
The next question is from [indiscernible]. How do you evaluate the entry of global competitors like Levi's into the Turkish denim market and the fact that the price gap between Mavi's products and those of its competitors has been consistently narrowing over the past 2 years?
Levi's has been in Turkey for probably longer than Mavi has been around. So therefore, one cannot necessarily talk about Levi's entering Mavi. Right now, Levi's market share, just this is the fact, is around 1% in the denim sphere. And they don't sell much when it comes to casual lifestyle. So maybe Levi's in that sense is not the best answer, but of course, you can extend the question in terms of asking us, how is Inditex company, Zara is doing, how is Mango down, how is H&M doing?
In terms of our pricing and price metrics vis-à-vis where they were, whether it's the quality front or whether it's the multiple that we sustain vis-a-vis our denim T-shirt, sweatpants, apparel -- other apparel and accessories. We believe we are at a well advantaged position to deal and tackle the competition. This question, I think, is taking a bit of a toll when I look at market share and mix of data that is shared to my marketing team on some of the bigger and typically cheaper priced competitors, we have -- local price competitors, and it has less impact on Mavi's business running case. Therefore, we are a bit immune, I would say, on the contrary to this pressure that we're talking.
On the contrary, we are looking into ways to see how much of those customers, whether it's H&M, Mango, Zara and other derivatives that we can continue to switch over to Mavi. How are we going to do that? Just to reiterate, as we are continuing to grow our square meters, as we are continuing to open up new stores, we are seeing more in what especially most recently, we opened up a new store concept. And if you have a chance, do visit it [Hilton] and we will expand that concept across the Turkish market this year. We automatically see a sales uptick. Therefore, multiproduct product offering, the growth in square meters and the way we present and sell our products and the quality and the fashion sense is making headwinds. So we are, in that sense, quite confident.
Whether the total market shrinks, grows that's other story. External, please put aside, as I mentioned in my presentation, we will leave the external piece aside and we will focus on doing our business, our ABC properly. And at this point in time, in our offices update, when we review our price position vis-a-vis international competitors, we don't feel much of a threat coming from them, although we take them seriously. Most important thing when it comes to product and innovation and passion rather than pricing.
Mario has another question. What is your expectation for the average occupancy cost ratio representing the rent-to-sales ratio for Mavi stores in 2025? And how does this compare to previous years?
Very good question. I mean when I look at our numbers, which is a fantastic platform, -- I mean one of the key indicators of -- if whether a company is doing a good job or not is, as you mentioned, the OCR ratio. And when I look at the numbers across the years, it has come down from 12.8% to 11.8%, then to 12.2% and most recently last year to again around 10%.
Therefore, this year, we have budgeted again to maintain it at around 10%. Therefore, our square meter performance and rent ratios are in a very healthy position. We feel we are quite confident. We are working relationship. By the way, on 2/3 of our rent is on variable cost, and also our business partners are happy. Meaning our mall vendor, mall operators are all happy with Mavi's business growing. They make money, we make money and the ratios are coming down or at least...
[Operator Instructions] We see that we don't -- we have a question right now. Go ahead, please.
So I have one question about the guidance. We are sharing the imputed interest impact. And can you share some guidance by excluding the imputed interest? So do we have a better -- I mean sense about your guidance, excluding all the accounting impacts. That's my first question. And the second one, your international business has been stagnant for a couple of years. Do you expect some normalization going forward? Or we expect same trend to continue?
Thank you. Let me start with the end and then I'll hand over to Bige Aksaray to talk about the impact of imputed interest and how it would play out through the year. In terms of international business, we believe the North America business, you will start seeing a pickup in top line growth we -- as we open up more stores and expand our business. Therefore, we are more confident in terms of more growth coming in, in terms of international business. Germany business has been stagnant this year. But as we speak, whether it's the warehousing system or the SAP transition, a lot of the IT and technical problems will be behind us over the next one month. Therefore, from there on, we are quite confident that we will start focusing more on delivering against the consumer and growing the business there.
Russia, you will recall, is an area where we are keeping business as it is. So it is at this point still maintain attitude. Therefore, if you're asking more in a mid-term perspective, we expect the North America business to grow and potentially grow in double-digit terms in U.S. dollar terms. Euro to stabilize, euro business to stabilize and start growing. And Russia, at this point, it is more like maintained as it is until more clarity comes through regarding the Ukraine war and future of Russia's relationship with the war.
Having said that, now I'll pass it over to Bige, our CFO. She may maybe have a few comments on Euro front.
We expect the interest rates to come down in Turkey in this year. So in line with this expectation, we are expecting increased interest impact will be lower in 2025. So in this guideline, we approximately still 1.2 to 1.5 points impact of increased interest.
We have a question from [Boris]. In the cash and cash equivalents footnote, there is a line amounting to TRY 1.3 billion other cash and cash equivalents. Can you share the details of this slide? What does it include?
Maybe I can just comment on this. There is actually a small explanation there. It is the credit card receivables that we view as cash and it's under the cash and cash equivalents. But you can also see it on the reported, we have a note.
[indiscernible] [Islam] has another question. What are your expectations regarding store traffic and conversion rate?
When we look at the data for the last 1 year, quarter-on-quarter. Now I'm talking about total apparel and then I will mention, I'd say a few words of Mavi. In terms of total apparel when it comes to Mavi -- total apparel market, the traffic has been slightly declining. The consumer's frequency of shopping apparel has been slightly declining.
And also the unit per transaction of total apparel market has also been slightly declining from consumers buying 1.7 units of products, coming down to 1.6. So slightly -- so there is a softness over the last 1 year that has been coming in. For Mavi, what we are targeting in terms of the performance for the rest of the year is more like 100 index. So what we want to achieve is in terms of building this budget and the guidance, of course, that we maintain traffic. As you know, every year, we're trying to gain around 1 million to 1.5 million new customers that have never shopped with Mavi. We are growing our square meters. We are expanding our product portfolio. Therefore, with all these expansionary approach and this year, another 20 stores coming into our portfolio on top of the 15 we introduced last year, they will all have relative positive impacts on this.
One other thing is greatly supporting our business in terms of conversion and customers being able to buy more has been the omnichannel integration. So as I mentioned, this year, there was an incremental TRY 600 million of revenue being generated through sales in the shops through online sales for products that were not in the store. This year, I think this number will also continue to grow as our sales staff and also consumers are learning that they cannot realize that they can do better shopping and have a better shopping experience -- omnichannel shopping experience in Mavi stores.
Therefore, if we cover all our bases properly, by the way, as I mentioned, the industry lead us 1.6 in terms of UPT, but ours is more than 2.2%, 2.3%. So we're already ahead of the market in terms of conversion and frequency and also units consumers are shopping. Our job regardless of who is coming in, is to make sure that they're coming into shop and they're coming into buy. Therefore, all of our fiscal year 2025 guidance at this point is more or less on a 100 index mindset for the time being.
We have [indiscernible] who has a question, you can go ahead...
A lot of moving parts. I think it will be useful, at least for me to maybe understand how you see seasonality throughout this financial year. So -- and by that, I mean if we look at the quarters, the upcoming quarters, just around the base effects in terms of trading last year. The guidance does mention the high base for 1Q. But I want to make sure I understand how it plays out in terms of margins and base effects across 2Q, 3Q, 4Q as broadly and generally as we can discuss this.
That's a good question and it's a bit complicated. Now in terms of -- for you for someone who's trying to understand this last even this year and our outlook has become challenging. It's also been a bit of a challenge for us. If you don't mind, I'll say a few words on this because it's a very good question. It's something we put a lot of effort.
First of all, if I look at -- remember that this quarter, I said because of the base, it's going to be a challenging year, and we might even close the first quarter on a minus vis-a-vis last year. But what I'm doing and what my team is doing, and we're looking at the past 3, 4 years of volume growth and performance, we are actually on a CAGR basis, delivering a high single-digit growth in terms of volume, around 8% to 10% growth.
So Mavi typically is a growth company where from one quarter to another, from one season to another, we are able to grow. A bit of distortion on 2 fronts has taken place: One, there was the earthquake and then no earthquake time zone and then this period coming in. So there was a bit of ups and downs, plus a bit of what we call the holiday period, religious period, moving 15 days every year towards into the quarter. So these are all distorting the whole picture for certain extent, in terms of planning across the season.
If you take away the first 6 months as a bundle, which will be probably finally a normalized period for us, which is from this February until July, our numbers will come out sort of even or flat. From next fall/winter season starting, hopefully, this will be behind us in terms of ups and downs, and we will be tracking more on the generic Mavi single-digit growth, which is what we planned for, from one season to another, as always, and we'll continue to grow our business from there.
Therefore, this first half of the year, we'll be looking a little more nasty when it comes to numbers in terms of headwinds because of the base impact. But when we go into our full winter impact, numbers will normalize and hopefully, a bit of these ups and downs that we have witnessed previously will normal. Therefore, you have to up to this year, when you look at it from one quarter to another and you were following Mavi every quarter, it might be a bit of a confusing year, which is also putting a bit of a pressure on us also internally in terms of when it comes to planning, what do we buy, et cetera.
But again, a side point I would like to say is, last year, our square meter growth accounts for around 4%, 5% should organically contribute to around 4%, 5% growth if everything goes normal. This year, we have another 20 stores and 15 expansions. Across the year, of course, it's not annualized, but that should add another 3%, 4%, 5% volume growth. So if you put it all together, we are on a base level targeting at a high single-digit growth. Then we have to also factor in some headwinds for the first -- first half of the year and softness in the market, therefore, which brings all of us to the guidance where we are saying it will be a low single-digit growth for this year under normal circumstances.
As always, internally, we, of course, are not happy. We want to do better than this. We want to see if we can do more product innovation, improve our services, improve our store layout, get better products, do better marketing, et cetera, to beat these numbers. But at the very onset of the year with a lot of uncertainties going on, that's how we view the numbers.
Great. That's super helpful.
If you have more specific, I can give you a bit more detail, but hopefully, that gives you a flavor of how we are viewing this year overall.
I don't see any other questions coming in. And if that's the case, as always, Duygu and IR team and my CFO and [Mehmet] and Bige are always more than happy to come back and help you with any other questions you might have. So am I. I wish us all a happy, healthy new year. I look forward to seeing you as we present the first quarter results in a couple of months. Tough year ahead, but we are all game. We are all positive. We are -- we feel blessed for having the Mavi brand and the franchise are behind us. And we look forward to tackling any challenges that might be.
So all our best, and take care. Bye-bye.