Burlington Stores Inc

NYSE:BURL

Greetings and welcome to the Mytheresa Second Quarter of Fiscal Year 2025 Earnings Conference Call.

[Operator Instructions] Today's call is being recorded. [Operator Instructions] It is now my pleasure to introduce your host, Martin Beer, Mytheresa's Chief Financial Officer.

Thank you, sir. Please begin.

Thank you, operator. And welcome, everyone, to Mytheresa's Investor Conference Call for the Second Quarter of Fiscal Year 2025.

With me today is our CEO, Michael Kliger.

Before we begin, we'd like to remind you that our discussions today will include forward-looking statements. Any comments we make about expectations are forward-looking statements and are subject to risks and uncertainties, including the risks and uncertainties described in our annual report. Many factors could cause actual results to differ materially. We are under no duty to update forward-looking statements. In addition, we will refer to certain financial measures not reported in accordance with IFRS on this call. You can find reconciliations of these non-IFRS financial measures in our earnings press release which is available on our Investor Relations website at investors.mytheresa.com.

I will now turn the call over to Michael.

Thank you, Martin. Also from my side, a very warm welcome to all of you. And thank you for joining our call.

Today, we will comment on the results and performance of our second quarter of fiscal year 2025. We are very pleased with our results in a still volatile macro environment. With strong, accelerating revenue growth; and positive, significantly improved adjusted EBITDA in the second quarter, we continued our very positive business momentum from the previous quarter and have achieved a significant step-up in financial performance in H1 of fiscal year 2025 compared to H1 of fiscal year 2024.

We believe that there are clear signals for an improving overall luxury market, while, of course, concerns remained for the macro environment. We have reaffirmed our leadership position in terms of financial performance and reputation in digital luxury. Our clear focus on the high-spending, wardrobe-building top customers sets us apart and allows us to win market share and grow profitably. Strong top customer revenue growth, an outstanding average order value and excellent customer satisfaction scores demonstrate our relentless customer focus, which is a key success factor for Mytheresa.

We continue to be very excited about the expected acquisition of YNAP. This acquisition will allow us to create a global digital luxury platform across multiple highly distinguished storefronts. We believe we will be able to generate significant synergies in using a joint backbone, but most importantly, we will have one of the most relevant overall value propositions for global luxury shoppers and brands. We continue to expect closing of the transaction in the first half of calendar year 2025.

Today, I wish to highlight 3 key messages to you that set us apart in the second quarter and clearly demonstrate the continued success of the Mytheresa business despite the ongoing macro uncertainty. First, with our distinctive business model focusing on big-spending, wardrobe-building luxury shoppers, we showed that we are fully on track for strong profitable growth for full fiscal year 2025. Second, we have clearly demonstrated again that Mytheresa builds a community for true luxury enthusiasts and creates desirability through digital and physical experiences, which makes us highly attractive, for true luxury brands, to partner with them. Third, we are well positioned and equipped to create a leading global digital luxury group of enormous reach and relevance with the expected acquisition of YNAP. Let me now comment in more detail on these 3 messages.

First, the second quarter demonstrated again our unique ability to generate profitable growth based on our distinctive business model, focusing on the wardrobe-building big spenders. In Q2 of fiscal year 2025, we grew our GMV by plus 11.9% compared to Q2 fiscal year '24. We achieved a strong net sales growth of plus 13.4% in Q2 of fiscal year 2025 compared to Q2 of fiscal year 2024. We are fully on track to achieve our outlook for the full fiscal year 2025.

The United States continues to be a significant growth driver for our business. We saw again a double-digit net sales growth of plus 17.6% in Q2 fiscal year '25 compared to Q2 fiscal year '24. And the U.S. accounted for 20.6% of total net sales of our business in the second quarter of this year, '25. Our highly curated selection of true luxury brands resonates very well with the big-spending U.S. luxury customers looking for multi-brand inspiration. And we continue to see the market as a major source for future growth.

In Europe, including Germany and the U.K., we also experienced a strong double-digit net sales growth of plus 12.8% in the second quarter of fiscal year '25 compared to the second quarter of the previous year, while results in China and Asia continued to be impacted by the ongoing macro headwinds and uncertainties.

Our clear focus on big-spending, wardrobe-building customers is the fundamental driver of our continued success. Our GMV with our top customers grew by plus 9.1% compared to Q2 of fiscal year '24. This was largely driven by an increase of the average spend in terms of GMV per top customer by plus 13.6% compared to the same period last year. In the United States, our business with top customers in terms of GMV grew by plus 34.7% in the second quarter of fiscal year 2025.

Martin will talk in a few minutes about the details of our bottom line results for the second quarter, but let me provide you already with some key operational [ highlights ]. We achieved excellent customer satisfaction measured by our internal Net Promoter Score that reached an outstanding 83.3% in Q2 fiscal '25, demonstrating the consistent excellence of our customer service's proposition. Our average order value last 12 months increased by plus 9.5% to EUR 736 in Q2 fiscal year '25, demonstrating the success of our focus on selling high-end luxury products to top [ customers ]. Furthermore, we reported stable return rates and improving cost ratios in the second quarter of fiscal year 2025. All these operational highlights underline the fundamental strengths and the consistent performance of our business model.

Second. The second quarter clearly showed that Mytheresa builds a community for true luxury enthusiasts and creates desirability through digital and physical experiences. This makes us highly attractive, for luxury brands, to partner with them. The second quarter saw many high-impact campaigns and exclusive product launches that drove our global business with high-spending, wardrobe-building customers. We launched exclusive womenswear and menswear runway looks from Moncler Grenoble; as well as exclusive bags and accessories from Bottega; Suna Fujita collection for womenswear, menswear and life.

We launched an exclusive womenswear capsule collection by Victoria Beckham only available at Mytheresa. We were exclusive partner for launching the womenswear Miu Miu ski collection only available at Miu Miu and Mytheresa. And we exclusively offered our top customers early access to the womenswear Gucci holiday collection. We were exclusive prelaunch partner for Khaite's resort 2025 collection and Alaïa's Archetypes collection. Finally, I wish to mention that we launched an exclusive menswear evening wear collection from Loro Piana. Please see our investor presentation for more details on brand collaborations in the second quarter.

Another very recent and noteworthy collaboration is the launch of Bvlgari fine jewelry and watches on Mytheresa. With the prestigious Italian Maison Bvlgari, we are further expanding our fine jewelry [ assortment ]. This latest brand partnership is a clear testimony and reinforcement of our clear focus on high-spending top customers.

In addition to creating desirability for our top customers with exclusive digital campaigns and product launches, we also hosted again many events and physical experiences for our top customers, some of which were true "money can't buy" experiences. We aspire to constantly engage with our top customers across the globe to build strong, long-lasting relationships. In the second quarter, we hosted various top customer events, including style suites in New York, Singapore, Toronto and Miami. We also invited top customers to a multi-day style suite event at the Nature Discovery Park on the rooftop of K11 MUSEA in Hong Kong. We arranged an intimate cocktail event for top customers in Jeddah and an intimate dinner in Abu Dhabi.

Top customers were invited to an exclusive Parisian experience with Berluti in Paris that included a private tour of Berluti's renowned shoe atelier. We also hosted an elegant cocktail reception and dinner with THE ATTICO at the iconic Sant Ambroeus in Milan in attendance of both designers Gilda Ambrosio and Giorgia Tordini. Together with Oscar de la Renta, we hosted a dinner at the Hia Hub in Riyadh in attendance of the designers Fernando Garcia and Laura Kim.

Another highlight was an intimate cocktail and dinner with Victoria Beckham at COQODAQ in New York to celebrate the launch of the third exclusive Victoria Beckham x Mytheresa capsule collection. We also hosted several fine jewelry events, including a cocktail at L'Ermitage Beverly Hills and an exclusive event with the fine jewelry brand YEPREM in New York. Please see our investor presentation for more details on our various exclusive events around the world in the second quarter.

As always, the absolute highlights for our top customers were amazing, true "money can't buy" experiences that we created for them in the spirit of being a community for luxury enthusiasts. We invited guests to an unforgettable mountain experience with ZEGNA between the scenic Biella Alps of Piedmont and the culinary treats [ of Milan ]. Guests were welcomed to Oasi Zegna, where they immersed themselves into the history and craftsmanship of ZEGNA through a private tour of the house's wool mill. The visit continued to the founder's villa, Ermenegildo Zegna, where guests enjoyed a lunch inspired by the family recipes of Nina Zegna. The experience concluded with an intimate dinner in Milan in attendance of Artistic Director Alessandro Sartori. Another highlight was an exclusive multi-day Nordic winter experience with Moncler Grenoble in Oslo. Over 2 days, our guests were invited to various unique moments, including a cocktail reception and dinner at the iconic contemporary Oslo Opera House followed by snow activities at Skimore park ski resort the day after.

In the United States, we have just announced that we will team up with Bemelmans Bar, a historic New York bar, for an exclusive invite-only pop-up in Aspen. Together, we are creating an immersive après-ski experience bringing luxury fashion and Bemelmans' signature martinis to Aspen from February 14 through March 2. In addition to providing our top customers with memorable experiences, all these events also created global brand awareness for Mytheresa through press and social media amplification.

Third, we see ourselves well positioned and equipped to create a leading global digital luxury group with enormous reach and relevance with the expected acquisition of YOOX NET-A-PORTER. We will be home to some of the most distinguished digital store brands in the world. Mytheresa; and the brands NET-A-PORTER, MR PORTER, YOOX and THE OUTNET all individually have earned a strong reputation in the luxury industry for their pioneering roles in innovation, authoritative editorial voice and curation as well as high-quality customer service. All store brands stand for clearly differentiated but complementary multi-brand offerings for luxury customers worldwide. We are committed to further strengthen and develop the unique store brands and their identities within the group by building on their heritages while fostering synergies in the back of house. We expect closing of the transaction in the first half of 2025.

As we enter a new and exciting phase of our company, we have decided to form the new group under the new brand name LuxExperience, which will replace MYT Netherlands Parent B.V. as our group name upon closing. This new name clearly underlines our unique focus on creating desirability for luxury enthusiasts with digital and physical experiences. LuxExperience will serve as a unifying symbol reflecting the core values of a strong customer focus, a highly curated edit and inspiration as well as the creation of desirability through unique digital and physical experiences. Of course, we will continue to serve our customers with our well-known and highly loved brand name Mytheresa. We will continue to be listed on the New York Stock Exchange, with the trade name LuxExperience; and the new ticker symbol of LUXE, L-U-X-E. That will replace the current ticker symbol MYTE, M-Y-T-E. LuxExperience will present the most exciting opportunity for investors worldwide to participate in the huge market opportunity in digital multi-brand luxury shopping.

We also recently announced the nomination of Burkhart Grund, Chief Financial Officer of Richemont, as a new Supervisory Board member. With the completion of the transaction, we are excited to welcome Richemont, one of the most renowned and largest luxury companies, as a major shareholder of Mytheresa. As part of the agreement signed, Richemont has the right to nominate a candidate for a seat on the Supervisory Board, expanding it from 7 to 8 seats. We are delighted that Burkhart Grund, a highly qualified financial and industry expert in the luxury goods sector, has been nominated to join the Board upon closing. The Board will remain composed of a majority of independent directors under both NYSE and Dutch corporate governance code standards.

Both the renaming and the nomination of Burkhart Grund will be presented for approval by our shareholders at an extraordinary general meeting scheduled for March 6 and are subject to completion of the YNAP acquisition.

With all the above, it should come as no surprise that we are very pleased with our performance in the second quarter of fiscal year 2025. We believe that the strong financial results demonstrate the strength and consistency of our business model delivering profitable growth. We are extremely well positioned and fully prepared for the expected acquisition of YNAP, which will unlock even greater opportunities for profitable growth and will create significant value for our shareholders. All this and the results of the first half of fiscal year '25 support our strong confidence in our medium-term growth trajectory and profitability targets.

And now I hand over to Martin to discuss the financial results in details.

Thank you, Michael.

As mentioned, we continue to successfully work towards the closing of our acquisition of the YOOX NET-A-PORTER group, expected in the first half of 2025. And we are truly excited for this next chapter of growth with establishing LuxExperience, a clear global leader in online multi-brand luxury. We will provide a more in-depth view on the performance and our plans for the future after closing. I will therefore focus this call on the financial highlights of our second quarter and the first half of fiscal year 2025 ended December 31, 2024.

We are very pleased with our results in the second quarter of fiscal year '25, double-digit net sales growth of plus 13.4%. Our AOV LTM increased by plus 9.5%. An improvement in the gross profit margin of 110 basis points; and a strong adjusted EBITDA margin of plus 7.3%, an increase of 350 basis points versus last year. Even with our strong top line growth, inventory levels decreased, minus 1.3%, year-over-year, with a DIO of 258 days, right at the target level. We will continue our track record of profitable growth, leveraging our global presence, increasing acquisition of true top luxury customers worldwide and ever-increasing support of the strongest luxury brands.

I will now review the financial results for the second quarter and first half of fiscal year '25 ended December 31, '24, in more detail and give additional input on certain key developments affecting our performance. Unless otherwise stated, all numbers refer to euro.

September through December '24, net sales grew by EUR 26.4 million or 13.4%. In the first 6 months of the fiscal year, net sales grew by 10.6% to EUR 424.7 million.

We saw an increase in GMV for all customers of plus 6.3% in the second quarter of fiscal year '25. And even more impressive, the GMV per top customer increased by a plus 13.6% during the quarter. With that, GMV increased by EUR 26 million or 11.9% to EUR 244.7 million, as compared to EUR 218.7 million in the prior year quarter. In the first 6 months, GMV grew by 9.2% to EUR 461.2 million.

With an increase of EUR 64 per order, our average order value in the last 12 months now stands at an outstanding EUR 736, as compared to EUR 672 in the prior year period, a plus of 9.5%. Our increase in AOV improves not only our unit economics but also manifests our successful focus on full-price selling at the very high end of true luxury.

We are outpacing our competitors and thus continuously capture market share. In Q2 of fiscal year '25, we grew our business in the U.S. by plus 17.6%. Our net sales share in the U.S. now stands at 20.6%, driven by an increase in GMV coming from our top customers of plus 34.7%. Our core market Europe also grew, by plus 12.8%, in net sales. And we are strengthening our market positions worldwide.

In the second quarter of fiscal year '25, gross profit increased by 16% to EUR 113.6 million, as compared to EUR 97.9 million in the prior year period. The gross profit margin increased by 110 basis points to 50.9%. In H1 of fiscal year '25, the gross profit margin increased by 140 basis points from 46.2% to 47.6%. We continue to focus on increasing our share of full-price sales and remain cautiously optimistic that we will be able to successfully continue to do so.

The adjusted shipping and payment cost ratio decreased by 90 basis points during the quarter, now standing at 13.8%, as compared to 14.7% in the prior year period. The improvement mainly stems from our high-quality customer focus resulting in higher AOVs and stable return rates. In H1 of fiscal year '25, the adjusted shipping and payment cost ratio decreased by 60 basis points to 13.7% from 14.3% in the prior year period.

In the second quarter of fiscal year '25, the marketing costs ratio increased by 160 basis points from 10.7% to now 12.3%. We stayed focused on acquiring high-potential customers and retaining our top customers. With returning to these normal levels of marketing costs, we are able to position Mytheresa even more successfully to capture market share as the market continues to pick up. During the 6 months ended December 31, 2024, the marketing costs ratio as a percentage of our GMV increased by 70 basis points to now 11.9%, as compared to 11.2% in the prior year period.

Adjusted selling, general and administrative, SG&A, costs ratio decreased by 160 basis points to 13.9% during the second quarter of fiscal year, in line with our preceding quarters of around 14% of GMV. On an absolute basis, adjusted SG&A expenses remained stable at EUR 33.9 million. In the first 6 months fiscal year '25, the adjusted SG&A costs ratio decreased by 110 basis points to 13.9%. We capitalize on cost leverage to optimize our operational efficiencies as we scale. We remain committed to continuously decrease our SG&A costs ratio.

In the second quarter of fiscal year '25, adjusted EBITDA increased by EUR 8.7 million to EUR 16.2 million. The adjusted EBITDA margin increased by 350 basis points to 7.3%, as compared to 3.8% in the prior year quarter. The increase is mainly driven by our gross profit margin improvement and further efficiencies in all cost lines despite investments in our market position. For H1 of fiscal year '25, adjusted EBITDA was at EUR 19.1 million, with an adjusted EBITDA margin of 4.5%, increasing by 280 basis points.

Depreciation and amortization remained fairly stable in the second quarter of fiscal year '25 with EUR 3.9 million, as compared to EUR 3.8 million in the prior year quarter. As a percentage of GMV, depreciation and amortization decreased from 1.8% to now 1.6%.

Our profitable growth and the strength of our business model were also visible on adjusted operating income and adjusted net income level. In the second quarter of fiscal year '25, adjusted operating income was at a margin of 5.5%, just slightly below the 7.3% adjusted EBITDA margin. This has been and is a continuous highlight of the Mytheresa business model. Adjusted net income in the second quarter was EUR 10.6 million or 4.8% of net sales.

Let's take a look at the cash flow statement. In the second quarter of fiscal year '25, operating cash flow used only EUR 6.0 million as we were coming back to normalized levels of working capital.

We are fully on track with managing our inventory levels. Our inventory stood at EUR 404.6 million, decreasing by minus 1.3% year-over-year even with our top line growth. As of December 31, '24, we had a DIO of 258 days, which is right at our long-term target of around 260 days inventory outstanding.

Cash flow from investing used up EUR 0.4 million in the second quarter and EUR 1.7 million in the first 6 months of the fiscal year. With this, CapEx was significantly below 1% of GMV, another highlight of our business model. We ended the 6-month period with EUR 13.8 million cash at hand.

The excellent performance of the quarter is fully in line with our expectations. Given the seasonality in the business, you always need to look at the first half and the second half of the fiscal year, combining fiscal Q1 and Q2 and combining fiscal Q3 and Q4. For the first half of fiscal year '25, net sales grew plus 10.6% and GMV grew plus 9.2%. The adjusted EBITDA margin was at 4.5%. We therefore confirm our guidance for the full fiscal year '25 ending June 30, '25, with GMV and net sales growth between 7% and 13% and an adjusted EBITDA margin between 3% and 5%. In line with our seasonality, we expect a typically weaker fiscal Q3, comparable with fiscal Q1, and a typically strong fiscal Q4.

With all the above, it comes as no surprise that we are very confident in the success of our unique positioning and business model. And we will continue our clear focus on strong and profitable growth. We are also truly excited for the medium- and long-term outlook of our business as we embark on the next chapter of growth, with the expected closing of the acquisition of the YOOX NET-A-PORTER group in H1 of calendar year '25. Forming the new group, LuxExperience, we aim to fortify our clear market leadership position in global multi-brand luxury set for strong, profitable growth; and thereby creating significant value for our shareholders and all stakeholders in Mytheresa and the YOOX NET-A-PORTER group.

And with that, I will now turn the call back over to Michael for his concluding remarks.

Thank you, Martin.

We are very pleased with our second quarter of fiscal year 2025 earnings results. We are even more pleased to see ourselves well positioned to achieve our fiscal year 2025 guided targets based on the first half of fiscal year '25. We'll continue to focus on creating a community for true luxury enthusiasts worldwide, and desirability, through digital and physical experiences. We see ourselves well prepared for the expected acquisition of YNAP; and are excited to create significant value for our high-end customers, brand partners and shareholders.

And with that, I ask the operator to open the line for your questions.

[Operator Instructions] Our first question will come from the line of Oliver Chen with TD Cowen.

Exciting with the deal. As you think about getting ready for the deal, what are your thoughts on the technology stack and what you're doing just to optimize the integration opportunity? Also as we look forward to that, any other thoughts on the YOOX side of the business in terms of restoring better profitability there? And then a follow-up on guidance: Would love color on gross margins in the second half and how you're viewing this. It sounds like inventory is in really good shape.

Thank you, Oliver. Let me address the first 2 questions, and then Martin will speak about the guidance. As we are before closing, we, of course, are not in a position to have full operational insights, but we explained clearly in our investor presentation and the announcement of the deal agreement that the clear strategy is to bring the luxury businesses of YOOX NET-A-PORTER onto the Mytheresa platform in the sense of our own developed technology. That is clear, clearly the best solution. We have a platform that works. It's fully owned by us, fully operated by us. We know it inside out. We have a strong engineering bench to do that.

Clearly, such a replatforming exercise will require 24 to 36 months. That is an expected duration and is quite achievable based on our experience of our own replatforming. We strongly believe that, with a joint back office and a separated back office for the off-price businesses, we do and provide the best and most efficient solutions for all those banners that join our group. And then on the banner side, we see opportunity to make them even stronger even though the brand equity of NET-A-PORTER, MR PORTER, YOOX, OUTNET are quite strong, but we will invest to make them even more desirable and to be fully in line with the principles of LuxExperience which is customer-focused curation and inspiration. So we are really excited about this and are hopeful to close the deal in the next couple of months. And then Martin, maybe you will take up the margin question.

Yes, happy to do so, guidance and gross profit margin development, exactly as you rightfully focus on how is the quarter performance changing the overall guidance and how it is relating to the guidance, yes. The performance in Q2 is fully in line with our expectations. And it is always, given the seasonality, you have to look at always the first and the second half. So Q2 and Q4 are very strong quarters. Q1 and Q3, given seasonality, are weaker quarters. And that's why, looking at the performance of H1; and the -- as you rightfully point out, Oliver, the improvement in the gross profit margin of 140 basis points -- in Q2, it was 110 basis points. We expect a similar performance of H2 than what we saw in H1, so therefore -- I mean, the 140 basis points, I'm not sure whether due to the lapsing of some effects we -- everybody should expect for H2, but we don't want to come back to decreasing gross profit margins. We want to continue, and that is clearly visible in our numbers, on our focus on a full price, on a very strong full price share, on targeting the right set of customers. And this is fully in line with our guidance, so also expect in H2 a stable, slightly increasing gross profit margin and the overall H2 to be very comparable with H1.

[Operator Instructions] And we'll take our next question from the line of Matt Boss with JPMorgan.

Congrats on a nice quarter. So Michael, could you speak to current health of the digital luxury backdrop today maybe relative to the last 2 years in terms of what you're seeing and just elaborate on the acceleration in demand that you saw across the U.S. and Europe in the second quarter? And has the momentum continued post holiday?

Sure. Thank you, Matt. I think the digital sector is in good health, if you regard it from the consumer perspective. The expansion of the digital share in luxury is continuing. Of course, there are sort of polarizations out there. It's absolutely true for the big spenders. We continue to see they spend more and more with us, spend more and more on digital. And there is this geographic polarization. We have seen continuous improvement in the U.S. post election, really strong demand. And we are very happy with our European business, almost 13% growth. So we have now a second strong leg in the business. And it's, of course, also a very strong business in the Arabic peninsula, while Asia, particularly Greater China, still lags behind, still is -- the demand is still damaged -- dampened by the economic outlook. So we would say the health is very good.

We have really seen turn -- out of the heavy discounting that we saw last year, the slowdown, as discussed before, has really surprised many players, leading to high inventory levels. And it's not only us. Martin clearly highlighted we are actually slightly below last year's inventory despite revenue growth, but the digestion of inventory or oversupply of inventory has happened across the board. So while we only see small green shoots in some places, the health of the industry is dramatically better than 12 months ago. And then -- and we in our numbers, for sure, have seen a pivot now for some quarters. And therefore, our outlook is positive, not negating that the macro environment is still quite volatile.

Great. And then Martin, maybe relative to 3% to 5% EBITDA margins this year, how best to think about the time line you see as reasonable for a return to historical high single-digit EBITDA margin.

Yes, happy to do so, Matt. I mean obviously we -- in the first half of the fiscal year, we had an EBITDA margin of 4.5%. And for the second half, I mean -- or for the full fiscal year, we guide to 3% to 5%. Given the uncertainties in the industry, the shifts that -- I mean nobody really can foresee how '25 and '26 will unfold, but it is clear that we embarked on a trend on the gross margin side. And this is the key driver for our overall profitability, so we clearly expect in the medium term to come back to the higher single-digit margins that we used to have a couple years ago.

Our next question will come from the line of Ashley Helgans with Jefferies.

It's Blake on for Ashley. I wanted to start with it sounds like your high-end luxury consumer is obviously really strong. Can you talk at all about the trends of the more aspirational customer throughout the quarter?

Sure, happy to do so. What we have seen, and it continues, that the U.S. consumer is really leading the way. And we have really seen strong growth in the U.S. market for some quarters; at least for Mytheresa, that is. And now we have also seen double-digit growth in Europe, which is quite nice to see, even though, of course, also in Europe there are markets that grow even stronger and some markets are lagging. And this is starting to be also driven by aspirational customers; also starting to be driven by better sales in accessories and bags, which are the categories that -- driven by -- or at least driven more by aspirational customers. This is by no means where we were in '22, but as you rightly say, our strong driver of -- or growth driver is the better part of the customer cohorts. And here we continue to see also in this quarter double-digit revenue increase per capita. These are the drivers. This makes Mytheresa so successful in a still volatile environment, but we -- and I will repeat: We see a pivot in the market. If you exclude Greater China, then we clearly see a pivot in the market.

That's encouraging. And then I wanted to ask 2 more, if I could. One was on the marketing ratio. It seemed to be up -- you seemed to lead in the marketing spend a bit more in Q2. How should you -- how should we think about that rate for the second half on marketing? And then the -- touching again on the top customers, I think they did decline slightly year-over-year versus being positive recently. How are you thinking about managing the growth of AOV versus top customers in that trade-off?

Very happy to answer. And you're right and you picked up correctly on our presentation. I'll leave it to Martin for the outlook of marketing spend, but actually the 2 questions are connected. We have, as you heard from Martin, increased our marketing spend significantly over the quarter last year. And what we are doing now, we are investing in growth with upper funnel investments. Of course, in '23, as the market was more difficult and as we managed costs very tightly to achieve still good financial results, we focused a lot of the marketing spend on the lower immediately-returning investments, but now that we see opportunity to grab market share and as now the market is picking up, we're also investing more on the upper funnel, which does not give you immediate new customers, which does not drive immediate pickup in revenue. But it sets and lays the ground for future cohort acquisition because for new customers it takes a while in luxury. It's not immediate conversion. And that's what you see and what you rightly picked up. A small decrease in the base even though the quality is amazing with double-digit revenue growth per capita is actually a consequence of lower longer-term operating, marketing spend a year ago. So it's good news. We are back. We are investing in marketing. And this lays the foundation for more customer growth and also expansion of the top customer cohort. So nice pickup. And Martin, maybe you give an outlook [ in that sense ].

Yes, yes. And with that, what Michael said, we expect also for H2 they come back to the normal levels of the marketing costs ratio that we always had around 12% and 12.5%.

Our next question comes from the line of Grace Osadolor with Morgan Stanley.

Congratulations on the results. I wanted to ask on what you're seeing around price points. We've had a lot of evidence of more premium brands doing better than luxury in the industry, so any color there that you can call out and also in terms of what you're seeing from luxury prices being put through, if you're seeing more entry-price items in the industry?

Thank you. Honestly, in our business, the emergence of more entry price points, I cannot confirm. Business is driven by big spenders. It's driven by high-priced items. What I can confirm is, however, that we clearly are in a moment of pause, of hold on any further price increases. So in that sense, we have come out of a phase where a lot of price increases happened. And arguably, some of them were too far or too high. The market overall, I think, is looking at opportunities to bring back the aspirational customer, as just discussed. And we do believe that well-priced entry-price level or -- of course, in the context of true luxury, is one element of that strategy, but our business, growth that you have seen and as demonstrated by the average order value which in turn is driven really by the average item value, the 9.5% increase, not -- it's our growth is not driven by business that is tilting towards premium or entry price points.

[Operator Instructions] We'll take our next question from the line of Oliver Chen with TD Cowen.

U.S., you've had really great momentum and you continue to have. What are your thoughts in terms of what's fueling that and also service levels and distribution centers.

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question longer term. Our thesis is for physical meets digital and bricks meets clicks. What do you think about the future of how you'll evaluate physical distribution as well, more broadly?

Well, I mean, on the second part, I agree. We agree that physical presence is key. I mean we believe we need to form strong customer relationships, and we are. We need to present digital but physical experiences as well. And for the moment, this clearly means physical pop-ups, physical presentations of our brand and what we do. As of this weekend, we will be present physically in Aspen with a après-ski experience together with our friends from Bemelmans Bar from New York, first time you can experience Bemelmans Bar outside of The Carlyle in New York. So that, we totally agree with. And it's no coincidence that we name our overall group LuxExperience. Therefore, physical incarnations, so to speak, are key. The key for our success, we believe at least, is our customer focus, really understanding what it is that our customer wants; introducing products that they desire, be it [ kids ], life; and now a clear focus on fine jewelry; and really establishing relationships with a customer clientele that is very careful with its time.

So you need occasional moments to really strengthen and form relationships. And otherwise, time is -- and speed is still one of the key components of excellent service and e-commerce; and we are working hard on this. Our new distribution center in Leipzig has again made it possible to be faster. We always said down on the road map, if we achieve critical mass in certain geographies, we also believe that regional distribution centers can play a role in making time a real USP. And obviously, with the expected acquisitions, there are more opportunities to start doing this.

We'll take our final question from the line of Wendy Gao with CICC.

Congratulation, to the nice results. I think I have a question about the top customer profile by regions, like can you share any -- something about maybe the mix about the top customer profile and also the relevant average order value.

I mean we have -- we shared in the past that the top customers' numbers account for close to 4% and make up close to 40% of revenue. And that mix is actually quite similar across geographies, so this holds true for Europe, for the Americas and for Asia and Greater China. What is true is that the average order values, particular in Greater China and particular in Asia, also in the Arabic peninsula, tend to be higher, so we are getting there more to 4 digits and above, whereas across the other geographies, it is 3 digits. And the average is EUR 736. So the -- there is even higher appetite for some of the more expensive items, fine jewelry in the Arabic peninsula; higher-priced accessories in Asia, Southeast Asia, and Greater China, but the percentage and the importance, also driven by our focus of top customers, is the same across all geography. And the desire to have the latest European luxury available in those regions is also the same in terms of which brands are popular. We have always shared that, if you look at the top 30 brands, they are very similar. Maybe the sequence is different across geographies, but the top 30 brands are very similar across the whole world for us.

Understood. And if we -- just talking about, like, Greater China, you mentioned that this region is still impacted by maybe the micro (sic) [ macro ] uncertainties or something else, but if you look at like quarter-by-quarters, how do you think about the trend? Do you think like [indiscernible] like recover a bit?

Yes, you're absolutely right. It's still dampened, but we do also, for this region, see continuous improvement, particularly in Greater China. We see that the business is improving slowly after, of course, quite significant contraction. We do believe it has a lot to do with the macroeconomic environment. And therefore, it is quite interesting and important to see what additional economic stimulus and economic progress the government will launch in China, but at the moment, we do see a slow recovery already.

That will conclude our question-and-answer session and our call today. Thank you all for joining, and you may now disconnect.