LuxExperience's Q4 2025 Earnings Call: Contradictions in Consumer Sentiment, Luxury Industry Outlook, and Margin Guidance

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: Illustrative net sales €2.8B, down 5.9% YOY; reported €1.3B for FY2025
• Gross Margin: Mytheresa: 47% for FY2025, up 130 bps YOY (Q4 +90 bps). NAP+Mr Porter ~51% in Q4, roughly stable YOY. Off-price: 37.9% in Q4 (down 490 bps YOY) and 35% LTM.
• Operating Margin: Adjusted EBITDA margin FY2025: -2.1% (illustrative) vs 3.5% (reported)

Guidance:

• FY2026 GMV expected around €2.5–€2.9B.
• FY2026 adjusted EBITDA margin expected between -4% and +1%.
• Mytheresa to continue GMV growth; NAP/Mr Porter to decline slightly; Off-price GMV to decrease considerably.
• Medium term: ~€4B revenues with ~7–9% adjusted EBITDA margin (~€320M at ~8%).
• Off-price expected to return to adjusted EBITDA profitability in 18–24 months.
• Positive operating cash flow for the group expected in 2–2.5 years.
• Turnaround funding needs €350–€450M; liquidity €784M at FY-end.

Business Commentary:

* Mytheresa's Strong Financial Performance: - Mytheresa reported a 48.3% gross profit margin for Q4 fiscal year 2025, an increase of 90 basis points from the prior year quarter. - Mytheresa's GMV grew by 11.1% in Q4, with an increase in average order value to €773. - The increase was driven by a focus on full-price, high-end luxury products, wardrobe building, and successful exclusive product launches.

• Operational and Financial Turnaround Efforts:
• LuxExperience plans to achieve €4 billion in net sales and an adjusted EBITDA margin of 7% to 9% for the group.
• The company is implementing a transformation plan to regain financial strength after years of decline, focusing on cost efficiencies and scale leveraging.

• The plan includes significant changes to the YNAP structure, technology migration, and consolidating operations and infrastructure.

• Net-a-Porter and Mr Porter Challenges:

• Net-a-Porter and Mr Porter saw a decline in GMV, with Q4 fiscal year 2025 net sales down -8.9%.

• The decline was due to a lack of targeted marketing and merchandise strategy, which is being addressed with a new leadership team and investment in buying and marketing efforts.

• Off-price Segment Restructuring:

• The off-price segment, comprising Jux and THE OUTNET, experienced a deliberate net sales reduction of -17.4% in Q4 due to restructuring efforts.
• The restructuring aims to separate the off-price business from luxury, focusing on a simplified and efficient operating model to regain profitability.

Sentiment Analysis:

• Management cited strong Mytheresa performance (Q4 net sales +11.5%; FY +8.9%; margins expanding) but acknowledged FY2026 as a transition year with group adjusted EBITDA margin guided to -4% to +1% and declines at NAP/Mr Porter and Off-price. They emphasized cost actions, leadership changes, and medium-term targets of €4B sales and 7–9% EBITDA margin, noting macro volatility and customs-related uncertainty.

Q&A:

• Question from Oliver Chen (TD Cowen): On Mytheresa, AOV and margins outperformed—what drove upside and outlook for margins? What’s the SG&A roadmap/timing for NAP? How should we think about customs-related sentiment risk? Lastly, for the €2.5–€2.9B GMV guide, what are the regional/geographic assumptions?
  Response: Mytheresa should keep improving gross margin/profitability; SG&A cuts are underway (ops/corp near-term; tech savings over 2–2.5 years); customs impact is manageable; growth led by Europe and the U.S., with no China rebound assumed.

• Question from Blake Anderson (Jefferies): For the FY2026 adjusted EBITDA margin range, what drives landing at the low vs high end, and any quarterly cadence or quarter‑to‑date color?
  Response: Seasonality persists (Q2/Q4 stronger); wide EBITDA range reflects market uncertainty and ongoing restructurings—low end if macro weak; no specific quarter‑to‑date metrics provided.

• Question from Oliver Chen (TD Cowen): On NAP/Mr Porter, timing and roadmap for inventory/assortment fixes and demand creation via marketing?
  Response: Assortment shifts have long lead times (FW26 deliveries begin May); marketing/customer tactics are being overhauled now, with noticeable impact expected in 1H next calendar year.

• Question from Oliver Chen (TD Cowen): Thoughts on the promotional environment amid sector closures and on creative changes at brands (quieter vs louder luxury) and related opportunities?
  Response: Consolidation is reducing promos and balancing inventory vs demand; creative shifts at major houses should spur interest, and the company will deploy buy/marketing behind winning designers.

• Question from Oliver Chen (TD Cowen): What are you seeing in consumer sentiment and how does Gucci’s new creative direction factor into demand?
  Response: Sentiment is improving but volatile—Europe strong, U.S. accelerating, Asia off a low base; Gucci’s new designer brings positive buzz, though sustained results require multiple seasons.

• Question from Oliver Chen (TD Cowen): For Off-price, what are the main challenges and timing to reach a satisfactory margin structure?
  Response: Key is separating infrastructure and aligning costs to a lower‑margin model; applying strict customer focus and cost discipline, with margin recovery targeted over roughly 18–24 months.