Emles Luxury Goods ETF (LUXE) Q1 2026 Earnings Report, Transcript and Summary

Greetings, and welcome to the LuxExperience First Quarter of Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. It is now my pleasure to introduce your host, Martin Beer, the Chief Financial Officer of LuxExperience. Thank you. Sir, please begin.

Thank you, operator, and welcome, everyone, to the LuxExperience Investor Conference Call for the First Quarter of Fiscal Year 2026. 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 investor.luxexperience.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. We will comment today on the results and performance of the first quarter of fiscal year 2026 of LuxExperience. As a group, we have now become the clear digital multi-brand leader for luxury enthusiasts worldwide. We are perfectly positioned to benefit from the expected further growth of the digital luxury market as well as from the ongoing consolidation process among the remaining players. As explained last time, LuxExperience reports on the basis of a new segment reporting structure. The 3 segments are Luxury Mytheresa, Luxury NET-A-PORTER and MR PORTER as well as Off-Price. We are very pleased with the results of the first quarter. Across all 3 segments, we have delivered strong results and improvements. Mytheresa continues to demonstrate our unique ability to deliver strong growth and profitability despite ongoing macro headwinds. NET-A-PORTER and MR PORTER clearly show the first signs of the commercial turnaround, which will drive renewed growth and profitability for the 2 store brands after years of decline. In the Off-Price segment, we anticipated a fundamental transformation by focusing on the healthy core, and I am pleased that we have been off to a fast start here also. We just announced that we have reached an agreement to sell the assets powering THE OUTNET platform to the O Group LLC. Shareholders of the O Group LLC include Joseph Edery and Ritesh Punjabi, CEO of Timeless Group of Companies. Both are renowned experts in the off-price luxury fashion sector. The divestment of THE OUTNET assets is a strategic step in line with our transformation plan announced in May 2025, which strengthens the operating model by reducing complexity. We believe that we found a great new home for THE OUTNET, and we can now fully focus on the transformation of the YOOX business and the disentanglement of off-price from the luxury businesses in the back end. This will allow us to also accelerate the buildup of an efficient infrastructure platform for NET-A-PORTER and MR PORTER. The closing of the transaction with the O Group is expected for Q1 of calendar year 2026, subject to certain closing conditions, including customary regulatory approvals and payment of the purchase price, which is subject to adjustments based on inventory levels at closing. As a result of the transaction, the Off-Price segment will purely refer to the business of YOOX from now on, while we classify THE OUTNET as discontinued operations as it is no longer considered part of our core financial performance. Let me now start by commenting on the Mytheresa business. We are extremely pleased with the outstanding results in the first quarter of fiscal year 2026. The ongoing and even accelerating momentum from the previous quarters demonstrates the strength of our business model, which focuses on wardrobe-building big-spending luxury customers. In Q1 of fiscal year 2026, we grew our net sales by plus 12.2% compared to Q1 fiscal year '25. In the United States, which is a key market for our business, net sales growth reached plus 21.9% in Q1 fiscal year 2026 compared to Q1 fiscal year '25. The U.S. accounted for 22.1% of the net sales of our total business in the first quarter. In Europe, excluding Germany, we experienced again an excellent net sales growth of plus 14.1% in Q1 fiscal year 2026. Our clear focus on big-spending wardrobe-building customers is the fundamental driver of our outstanding growth and financial strength at Mytheresa. In the first quarter of fiscal year '26, the top customer base of Mytheresa grew by plus 10.2% compared to the prior year period, significantly higher than in previous quarters. Furthermore, the average spend per top customer in terms of GMV grew again by a very strong plus 15% in Q1 fiscal year '26 versus Q1 fiscal year '25. The average order value last 12 months for Mytheresa increased by a remarkable plus 10.7% to a record EUR 797 in Q1 fiscal year '26, demonstrating the success of our focus on selling full price high-end luxury products to top customers. The continued full price focus at Mytheresa is also evident with the again improved gross profit margin growing by 70 basis points in Q1 fiscal year '26. Our success with big-spending wardrobe-building customers makes Mytheresa a highly desired partner for luxury brands. In the first quarter of fiscal year '26, we saw again many high-impact campaigns and exclusive product launches, underlining Mytheresa's strong relationships with luxury brands. We launched exclusive styles from Loewe Fall/Winter '25 runway collection for womenswear and menswear only available at Mytheresa as well as an exclusive womenswear Max Mara cashmere capsule collection only available at Mytheresa. We were the exclusive prelaunch partner for Brunello Cucinelli's Fall/Winter '25 collection and Calvin Klein Collection Fall/Winter '25 collection for womenswear and menswear. We also launched exclusive womenswear styles from Moncler's Fall/Winter '25 collection as well as exclusive styles from God's True Cashmere and ZEGNA's Fall/Winter '25 collection. In addition to creating desirability for our top customers with exclusive digital campaigns and product launches, we also create desirability and the sense of community for Mytheresa's top customers through unique money-can-buy physical experiences. In the first quarter, we hosted various top customer events, including a private diamond master class and a tailored styling session with Jessica McCormack at her Mayfair Townhouse in London. Together with Givenchy, we celebrated Sarah Burton's debut runway collection with a curated cocktail reception, a private exhibition tour and an intimate dinner in Shanghai. We hosted a top customer cocktail in Madrid at the Rosewood Hotel and also held an exclusive Schiaparelli style suite there. To celebrate London, Milan and Paris Fashion Weeks, we invited top customers to various shows to experience the magic of OneWay firsthand. Furthermore, we hosted style suites in London, The Hamptons, New Jersey, Singapore, Hong Kong, Warsaw, Frankfurt and Zurich, presenting new collections in immersive curated environment. Highlights in the United States included intimate dinners with Michelin Star chefs in Aspen and Los Angeles. We hosted a New York Fashion Week After Party at the legendary Indochine with Calvin Klein Collections. We partnered with Loewe for an exclusive event at The Glass House in Connecticut, showcasing the brand's exclusive collection inspired by Josef and Anni Albers, followed by an intimate dinner by Chefs Riad Nasr and Lee Hanson of Frenchette. Furthermore, we hosted an exclusive 2-day experience with ZEGNA in Turin, featuring an on-stage dinner with a private opera performance at Teatro Regio and next day, a lunch at the famous Ristorante del Cambio. In summary, we are extremely pleased with the Mytheresa business in the first quarter of fiscal year '26, and Martin will later show how the outstanding top line results translated into very strong bottom line results. Let me now comment on the luxury segment comprised of NET-A-PORTER and MR PORTER. In the first quarter of fiscal year '26, we clearly saw the first signs of the commercial turnaround directly resulting from the execution of a strategy that focuses on luxury customers seeking editorial inspiration and brand discovery as well as a strict focus on full price selling. In Q1 fiscal year '26, net sales declined as expected by minus 10.8% versus Q1 fiscal year '25 for NET-A-PORTER and MR PORTER combined. United States declined by minus 10.7% and Europe, excluding the U.K. and Germany by minus 3.6% in terms of net sales in Q1 fiscal year '26 compared to Q1 fiscal year '25. The net sales decline is still driven by 2 little investments into attractive new merchandise a year ago for the current fall/winter season. For the next spring/summer season, we can already see improved results. While the overall net sales declined for NET-A-PORTER and MR PORTER combined, the average spend in terms of GMV per EIP customer, the so-called extremely important people customers grew by plus 4% in Q1 fiscal year '26 versus Q1 fiscal year '25. The average order value last 12 months increased by a remarkable plus 15.5% to EUR 836 for NET-A-PORTER and MR PORTER combined in Q1 fiscal year '26. Finally, the gross profit margin improved by 130 basis points in Q1 fiscal year '26 for NET-A-PORTER and MR PORTER combined, driven by a higher share of full price sales amongst other factors. All these KPIs indicated an already much healthier business. In the first quarter of fiscal year '26, a renewed focus on high-impact campaigns and exclusive product launches was successfully initiated for NET-A-PORTER and MR PORTER with a clear focus on luxury customers, looking for editorial inspiration and brand discovery. NET-A-PORTER launched an exclusive capsule with Jimmy Choo focused on key boot styles for fall/winter '25. NET-A-PORTER also launched an exclusive colorway of the iconic Chloe Paddington bag, which drove outstanding media engagement with audiences as well as an exclusive on-trend animal print Nilii Lotan bag, all drove commercial success and increased brand awareness as the destination for fashion discovery. MR PORTER launched the Bottega Veneta for Winter '25 collection with an exclusive prelaunch for EIP customers. MR PORTER also launched 13 exclusive styles from the Eau Fraîche Déprimés Fall/Winter '25 collection. And NET-A-PORTER and MR PORTER both launched Aime Leon Dore as a new brand, each with exclusive capsule collections. Further new brand launches at MR PORTER include Eleventi, Apprécié, Morehouse and Satoshi Nakamoto. NET-A-PORTER also continued to drive outstanding customer engagements through unique editorial content. In September, the Oscar-nominated actress, Emily Blunt was the cover star of Porter Magazine, marking the most engaged Porter cover in the last 12 months. September also saw NET-A-PORTER present Season 10 of the Incredible Women podcast series celebrated with a private event in London hosted by international model, actress and campaigner Adwoa Aboah. MR PORTER's journal feature on Walton Goggins drove 14,500 visits to the journal section, whilst its video attracted 390,000 views on Instagram Reels. It was featured in media outlets, including People Magazine and the Hollywood report. Partnering with such talent has proven effective in reaching new audiences, enhancing brand visibility and driving traffic to the MR PORTER site. MR PORTER's film with actor Adam Brody modeling key design items has had 593,000 views. NET-A-PORTER created a number of unique experiences for its EIPs, including a dinner in London, celebrating 25 years of NET-A-PORTER to which top clients who have shopped with the brand for the last 25 years were invited. And to route the new runway collections, NET-A-PORTER hosted EIP dinners for its customers in all 4 fashion week cities, New York, London, Milan and Paris. MR PORTER hosted dinners in both New York and Hong Kong for high-profile EIP customers. It also invited to a dinner in London to celebrate its collaboration and exclusive capsule with Drake in attendance where press influencers and EIPs. A share of the proceeds from the capsule collection were donated to the MR PORTER Charity Health & Mind, which runs in partnership with Movember, which supports men's mental health. This story and capsule collection had the highest click-through rate from the homepage to product seen this quarter. Already, we can see that the new leadership team at NET-A-PORTER and MR PORTER is driving the creation of much healthier and resilient business model to regain financial strength and growth. Martin will later comment on the progress achieved in improving the profitability of the NET-A-PORTER and MR PORTER luxury segment. Lastly, let me comment on YOOX' stand-alone performance in Q1 of fiscal year '26. We are pleased with the progress that we have achieved to separate the YOOX business from the luxury of YNAP. The sale of THE OUTNET assets will allow us to accelerate the process of separation further. To create a lean business model that is compatible with a lower margin and lower average order value off-price business, we are focusing the YOOX business on the healthy core in terms of geography and operational fulfillment models. The closure of the marketplace business, warehouses in Dubai and Hong Kong as well as the optimization for higher tariff rates shipping to United States causes a deliberate net sales decline in the short term, but will allow to return to solid profitability. In Q1 fiscal year '26, net sales declined as expected by minus 16.5% versus Q1 '25 for YOOX. Europe, including Germany, increased by plus 1.7% in terms of net sales in Q1 fiscal year '26 compared to Q1 fiscal year '25. The overall net sales decline is, as explained, mainly driven by a renewed focus on a healthy core for the YOOX business. While the overall net sales declined for YOOX, the top spending customer average spend in terms of GMV grew by plus 4.7% in Q1 fiscal year '26 versus Q1 fiscal year '25. The average order value last 12 months increased by a remarkable plus 17.8% to EUR 256 for YOOX in Q1 fiscal year '26. Finally, the gross profit margin improved by 400 basis points in Q1 fiscal year '26 for YOOX compared to the prior year period, driven mostly by last year effects and also a higher share of first price sales. All these KPIs indicate a clear focus on the healthy part of the customer base. As part of the transfer of THE OUTNET assets to the O Group, LuxExperience will, for a certain period after closing, provide certain operational and IT services, all priced at cost level to the buyer. Latest by the end of calendar year '26, all services and activities in relationship to THE OUTNET will have stopped for LuxExperience, significantly reducing the complexity in the group. And now after having reviewed the good commercial results and improvements across all businesses, I hand over to Martin to discuss the financial results in detail.

Thank you, Michael. As Michael outlined, we were able to successfully find a new home for THE OUTNET. Just to highlight the financial implications. THE OUTNET assets will be transferred at closing with an expected cash consideration at USD 30 million, depending on inventory levels at closing. Closing of the transaction is expected in the first quarter of calendar year '26. In line with IFRS requirements, we will report THE OUTNET already in this Q1 of fiscal year '26 as discontinued operations as it is no longer considered part of our core financial performance. The Off-Price business is now fully focused on YOOX, and we adjusted our reporting accordingly. Therefore, with our fiscal Q1 reporting running from July to September '25, we will report quarterly results along our 3 business segments: Luxury Mytheresa, Luxury NET-A-PORTER and MR PORTER and Off-Price business of YOOX and highlight specific developments that influenced each segment's performance. Following that, I will review the consolidated financial results for LuxExperience at group level and give an update on guidance, now excluding THE OUTNET. Unless otherwise stated, all numbers refer to euro. Let's first review the performance of our Mytheresa business. During the first quarter of fiscal year '26, GMV grew by 13.5% to $245.9 million compared to the prior year period. Net sales also grew double digit to $226.3 million, representing a plus 12.2% increase. We continue to take share in an overall soft market. In Q1 of fiscal year '26, Mytheresa's gross profit margin increased by 70 basis points to 44.6% as compared to 43.9% in the prior year period. Main driver was our continuous efforts to increase the full price share. In Q1 of fiscal year '26, the shipping and payment cost ratio increased by 110 basis points to 14.6% as compared to 13.5% in the prior year quarter. The increase is mainly due to the new U.S. tariff situation. As we pay all duties for our U.S. customers, the cost increase for us is reflected in our shipping and payment cost ratio. If you excluded the duties costs, the shipping and payment cost ratio in relation to GMV decreased by 90 basis points from 8.8% to 7.9% in Q1 fiscal year '26. Main drivers of this improved cost ratio were higher AOVs and lower negotiated shipping fees based on increasing group volumes. With these measures, we limited the effect of increased U.S. custom duties in the quarter to 110 basis points increase in our shipping and payment cost ratio and mostly compensated the increase with the above-mentioned 70 basis points increase in our gross profit margin. The net effect of U.S. customs and the combined view of the increased shipping and payment cost ratio and the increasing gross profit margin was therefore mostly compensated and overall not significant. In Q1 of fiscal year '26, the marketing cost ratio decreased by 110 basis points to 10.4%. We are successfully capturing market share, but are mindful of the overall soft market situation. As targeted, we will increase marketing spend throughout the remaining fiscal year if deemed effective. Also, the selling, general and administrative SG&A cost ratio decreased by 110 basis points to 12.9% compared to the prior year quarter. SG&A expenses increased by 4.7% compared to the previous year quarter, and the cost ratio benefited from the strong top line increase. Subsequently, the adjusted EBITDA margin expanded by 210 basis points during the quarter to 3.5% as compared to the 1.4% in the prior year period. Adjusted EBITDA grew by EUR 5 million to EUR 7.9 million in Q1 of fiscal year '26. Q1 profitability in the previous year was very low. And given the cost developments just mentioned, we expect profitability levels at Mytheresa in the remaining quarters in this fiscal year '26, transition year, to be at previous year profitability levels. Inventory levels at Mytheresa are up 4% compared to previous year despite double-digit growth. Let me now comment on the Luxury NET-A-PORTER and MR PORTER segment in more detail. In the first quarter of our fiscal year '26, GMV and net sales decreased by minus 10.8% to EUR 224.5 million and EUR 212.3 million, respectively. The anticipated top line decrease was fully in line with our expectations and due to lower merchandise order volumes from previous year. The new leadership is working on adjusting upcoming seasons buying volumes and aligning subsequent marketing strategy to reembark on top line growth again. We expect to see first signs on GMV growth in the second half of this fiscal year. The gross profit margin in Q1 increased by 130 basis points from 46.5% to 47.8%, with the increase influenced by a higher share of full price sales and onetime effects in the previous year. Core focus of our transformation plan is to bring down the SG&A cost ratio. SG&A expenses in Q1 of fiscal year '26 decreased by minus EUR 4.2 million or minus 6.8% compared to the last quarter, which was Q4 of fiscal year '25, running from April to June '25. Compared to the first quarter of previous year, SG&A expenses decreased by minus EUR 6.6 million or minus 9.7% if you included IT development costs that were capitalized last year. As this is the first quarter of fiscal year '26, we will see more significant effects throughout fiscal year '26 and fiscal year '27. With the top line decrease of minus 10.8% in GMV in the quarter, the SG&A cost ratio increased marginally by 30 basis points compared to the previous year quarter, including capitalized IT development costs in the previous year quarter. Overall, the SG&A cost ratio in the quarter is at 27.6% of GMV compared to 12.9% at Mytheresa. We will continue to bring down this more than 1,000 basis points difference with adjusting the operating model, the IT replatforming, corporate overhead cost savings and reembarking on top line growth. Given the top line decrease of minus 10.8% GMV in the quarter, EUR 9.3 million less gross profit was generated. With the other cost lines in line with our expectations, the adjusted EBITDA margin in the quarter was at a negative minus 6.9%, below the adjusted EBITDA level at Mytheresa. The new leadership teams at NET-A-PORTER and MR PORTER are in the middle of refining and investing in our buying and marketing efforts to set NET-A-PORTER and MR PORTER on a growth trajectory again while focusing on profitability. With the execution of our transformation plan and bringing down the SG&A cost ratio, we expect the NAP/MRP segment to achieve comparable profitability levels to the Mytheresa segment with a targeted adjusted EBITDA margin of 7% to 9% medium term. We expect NAP/MRP to breakeven on adjusted EBITDA margin level already in fiscal year '27. Inventory levels at NAP/MRP are down minus 8.8% to previous year, with a healthy all-season share at targeted levels and in line with the situation at Mytheresa. Let me now review the financial performance of the off-price business of YOOX. Continuing the path of a more comprehensive restructuring effort at YOOX and with focus on profitable customer cohorts, GMV and net sales in Q1 of fiscal year '26 declined by 19.3% and 16.5%, respectively, to EUR 118.6 million GMV and net sales in the quarter, also driven by the deliberate shutdown of the unprofitable YOOX Marketplace, which had a GMV of EUR 4.6 million in Q1 fiscal year '25. YOOX' gross profit margin increased by 400 basis points from 32.6% in the prior year period to 36.5%, mostly driven by previous year destocking initiatives. Core focus of our transformation plan is to bring down the SG&A cost ratio also at YOOX. At YOOX, SG&A expenses in Q1 of fiscal year '26 decreased by minus EUR 6.2 million or minus 15.5% versus Q1 of previous year, if you included all the IT development costs in previous year on a stand-alone basis. With the carve-out of THE OUTNET from Off-Price and reporting it as discontinued operations, we excluded all P&L effects that were directly attributed to THE OUTNET and will fall away subsequently. Certain cost elements in corporate and tech will not fall away with the sale of THE OUTNET and therefore, increased the cost share for YOOX and the group. With reporting THE OUTNET as discontinued operations, EUR 3.6 million SG&A expenses from THE OUTNET were allocated to YOOX already in this quarter. THE OUTNET had net sales of EUR 41 million in Q1 of fiscal year '26. At YOOX, the SG&A cost ratio was at 28.6% of GMV. We will continue to bring down the SG&A cost ratio with significantly simplifying the operating model, subsequent IT downsizing, corporate overhead cost savings and reembarking on top line growth. During the first quarter of fiscal year '26, the adjusted EBITDA margin was at minus 18.1%, in line with expectations in our transformation plan. With the execution of our defined transformation measures, we expect to return to adjusted EBITDA profitability of YOOX in 15 to 21 months and return to top line growth already in fiscal year '27. Inventory levels at YOOX are minus 13% to previous year, in line with our targeted inventory strategy at YOOX. Now that we have reviewed the performance of our individual segments, let's take a look at how these results translate into our group level financials for LuxExperience. In Q1 fiscal year '26, group GMV amounted to EUR 588.9 million, while group net sales were at EUR 557.2 million. GMV and net sales declined by minus 4.3% and minus 4.2%, respectively, as compared to illustrative levels in Q1 fiscal year '25, excluding THE OUTNET. Adjusted EBITDA on group level stood at minus EUR 28.1 million with an adjusted EBITDA margin of minus 5%. Top and bottom line of the LuxExperience Group are at expected levels for Q1 of fiscal year '26, excluding THE OUTNET. At the end of Q1 fiscal year '26 and excluding the inventory of THE OUTNET, group inventory stood at EUR 1.18 billion. Operating cash flow of the LuxExperience Group was at minus EUR 146.4 million, driven by phasing, seasonal and onetime effects. Excluding the onetime effects, we had around minus EUR 40 million negative operating cash flow. Onetime effects relate to restructuring expenses, phasing of accounts payables and custom drawback receivables. Negative cash flow in the first quarter is typical due to seasonal inventory buildup. For the full fiscal year '26, we expect operating cash burn to stay well below EUR 200 million, given fiscal year '26 as a key transition year for our transformation plan. We are executing our transformation plan on a fully funded basis with total cash outflow during all years of the transformation plan to range between EUR 350 million and EUR 450 million. We expect to break even on an operating cash level in 2 to 2.5 years. The group ended the fiscal year with a cash position of around EUR 460 million and additional access to revolving credit facilities of EUR 200 million, of which EUR 42.2 million were utilized end of Q1 fiscal year '26. LuxExperience has a strong balance sheet with EUR 1.7 billion of current assets, mostly inventories and cash, almost no bank debt and an equity ratio of 60%. The integration of the YNAP finance teams and formation of all LuxExperience Group structures have started early and are progressing very well. Key activities included a new group-wide organization and governance setup, an integrated finance consolidation and IFRS 16 tool, new segment reporting, unified accounting and reporting policies with transparent cost center structures to enable accountability and cost savings and a highly efficient and effective finance group team setup. The statutory and group audits for fiscal year '25 under strict PCAOB guidelines were successful, and we filed our 20-F as planned on October 30, 2025. We are in an ideal position to execute our transformation plan to deliver sustainable growth and profitability, supported by our strategic initiatives across our segments. With our continued success at Mytheresa, we have proven that we are the best execution team and global digital luxury. The new leadership teams at NET-A-PORTER, MR PORTER and YOOX have begun their work. And at group level, we are in the midst of implementing the measures of our transformation plan. Given our agreement to sell the assets powering THE OUTNET, we would like to provide an updated guidance for fiscal year '26 that reflects the new structure of our LuxExperience Group. The new guidance takes into consideration the anticipated financial impact of the transaction and reconfirms our guidance for the other business and segments. We remain committed on the full execution of the transformation plan, which includes operational adjustments, technology platform integration and organizational alignment. As communicated, fiscal year '26 will be our key transition year. For fiscal year '26, we expect LuxExperience's GMV at around EUR 2.4 billion to EUR 2.7 billion and an adjusted EBITDA margin between minus 2% and plus 1%. We expect Mytheresa to grow mid- to high single digits in the full fiscal year. NET-A-PORTER and MR PORTER will show growth in the second half of the fiscal year, but a decline by low single digits for the full fiscal year. YOOX will continue to adjust the revenue base downwards, but at a lower extent in the second half of the fiscal year. Our medium-term targets remain unchanged at adjusted EBITDA profitability at 7% to 9% and to return to 10% to 15% annual growth rates. And with this, I hand over to Michael for his concluding remarks.

Thank you, Martin. We are very pleased with our first quarter of fiscal year '26 earnings results. The outstanding performance of Mytheresa demonstrates our proven ability to drive profitable growth in digital luxury and the clear signs of the commercial turnaround at NET-A-PORTER and MR PORTER show that we are fully on track with our transformation plan. With the agreement to sell the assets at THE OUTNET, we have also found a tailored solution that allows us to accelerate the transformation at YOOX. LuxExperience is in the perfect position to benefit from the continued growth of digital luxury and the ongoing consolidation in the sector. We expect to become the one and only destination for luxury enthusiasts worldwide. We will continue to generate enormous value for our customers, brand partners and shareholders. And with that, I ask the operator to open the line for your questions.

[Operator Instructions] Your first question comes from the line of Blake Anderson with Jefferies.

So I wanted to ask on the acquisition. It looks like it's been almost 7 months now since you closed it. There are lots of moving pieces. I wanted to ask what are the strongest signs that you think your plan is working so far and that it's on track? And what would be any areas, if any, that have surprised you?

Thank you, Blake. Indeed, we closed in April. So a few months into the overall work, we are well on track. As explained in our call, we -- if you look at some of the quality KPIs of margin, of AOV, of spend per top customer, we are well on track. And for the luxury NET-A-PORTER, MR PORTER, we believe and expect positive growth already next year in '26 calendar. So really good developments. We are really happy that we were able to bring a new leadership team so quickly at NET-A-PORTER, at MR PORTER and also at YOOX. The signed agreement to sell the assets of THE OUTNET was a significant milestone. We have announced workforce reductions in multiple locations. So it's all well on track. And Martin explained that we already see the results of very early SG&A reductions. I mean a lot of the activities that we are doing have, of course, lags before they can really take effect in the P&L. So we are very happy. We are not surprised. We knew what was not working. We knew what was working because we did a very extensive due diligence. And are, of course, in a quite unique position of truly understanding the business model of NET-A-PORTER and MR PORTER and also very close to the off-season luxury business. So it looks very, very good. We explained in May that this is a multiyear exercise with continuous improvement. This is not front loaded, back-end loaded, we will continue to show quarter-by-quarter improvements. And this was only the first quarter.

Makes sense. Still very early. So I wanted to ask on the guidance. It sounds like there weren't really any changes there aside from THE OUTNET sale. Just wanted to confirm that and then see if there were any -- was any color you could provide on a quarterly basis kind of by segment there. And I think you said the Mytheresa segment was maybe mid- to high single-digit GMV growth, which would I think would imply a slowdown. So any more color on that segment as well, which has been really strong for you?

No, you're completely right, Blake. So there is a reconfirmation of the perspective and the guidance for the 2 segments, Mytheresa and NET-A-PORTER and MR PORTER. And it is obviously an adjustment needed if we take out THE OUTNET and then report it as discontinued operations, that is around EUR 212 million of net sales for the full year that we expected. And therefore, we had to adjust that. You see that also we narrowed the range on top and bottom line. I mean we had on bottom line minus 4% to plus 1%, and now we narrowed it down. So I think we are -- as a key success factor is to really start early and really push the transformation plan, we are well on track to see the good movements. So yes, reconfirmation of the guidance, adjusting it for THE OUTNET effect. On the Mytheresa guidance, mid- to high single digits, I mean, there's no specific call out. I mean, as we are seeing very strong support and great signs of growth throughout both luxury segments. But obviously, we want to be mindful in the overall situation of the market. I mean, it's always tough to predict. And therefore, it is -- this is in line with what we expect today in line with an overall soft market.

Your next question comes from the line of Oliver Chen with TD Cowen. [Operator Instructions] There appears to be no audio from Oliver Chen's side. We will move to the next question. The next question is from [ Cedric Norris with Morgan Stanley ].

So I have 2, if that's okay. First, there is this idea that fashion trends follow a pendulum swinging from maximal ease and colorful style to more quiet luxury ones, the latest being more in favor over the recent past. We recently saw sea waves of fashion designers change doing their debut in some of the largest luxury houses. So having in mind that fashion trends are hard to predict, could you perhaps elaborate on what you have seen in terms of consumer appetite for bolder Lux and the overall interest for the luxury category? Have the recent creative directors changes generated more interest? And if yes, for which brands? And then secondly, if you could share what you saw in terms of performance by category, that would be helpful.

Happy to do so, [ Cedric ]. So you're absolutely right. We have come out of a fashion week cycle with lots of new designers. And at a very high level because each brand has its own story, there was a bit of movement to more bolder, more colorful, more feminine, more femininity across many, many brands. We clearly see more buzz. We clearly see more interest. Most of these collections have not dropped yet. So this is really February, March, April, where we will see how the appetite for consumers are by different Maisons. But we clearly have seen a sort of joint idea of many creative directors to move into a new swing, move out of quiet luxury. But I always insist that the drivers of quiet luxury brands like ZEGNA, Brunello Cucinelli, Loro Piana, they will continue to be successful. This is an additional side of fashion that hopefully will excite customers as we move into February, March, April when a lot of these shows and collections will become available. In terms of what is driving the growth, this is, of course, very much the story of Mytheresa, the story of NET-A-PORTER and MR PORTER. It's clothing. It's ready-to-wear. This is where we see the nicest momentum. This is driven by a very diverse lifestyle of our clients. Vacation remains a big theme, but both summer and winter. And then there is one additional category that we always call out, which is the success of fine jewelry now also on digital. It's probably one of the later categories that have moved, and we see good traction both on NET-A-PORTER and on Mytheresa for fine jewelry in the neighborhood of 20,000, 50,000 pieces. So we are gradually moving up into very nice price points, of course, not odd jewelry, but real luxury products.

[Operator Instructions] Your next question comes from the line of Oliver Chen from TD Cowen.

This is Nicholas Sylvia on for Oliver Chen. I do believe some of my questions were answered already, but I did want to ask a little bit more on guidance. I know you mentioned that EBITDA margin sounds like was adjusted a tiny bit on the lower end, if I'm not mistaken. I was just wondering if you could provide any additional color on what you think the primary drivers are there, if there are any besides the sale of THE OUTNET? And my second question is if you could just speak a little bit more on what you're seeing regionally.

Yes, maybe I'll take the first question on the guidance, yes, we adjusted upwards. So we had adjusted EBITDA margin for the group minus 4% to plus 1% previously and therefore, now guide towards minus 2%, plus 1%. So if you take the midpoint, it's an improvement. Obviously, the -- as Michael outlined, it is the transformation plan that we are embarking on from a group level. And in addition, the work of the new leadership teams at the brands, we are all working on improving the profitability from the business side, from the back-end side and also then focusing on reembarking on growth. But for us, and we outlined that in the -- in multiple last calls, the SG&A cost ratio was really the key element of improving the profitability. . And it is quite noteworthy that already in Q1, so July, August, September, just a couple of months after closing, we were able to decrease SG&A costs by minus EUR 15 million, if you combine the 2x YNAP segments of the quarter in comparison to the prior year quarter. So we are obviously front-loading a lot of pain, a lot of adjustments that we need to do and we will continue to do so. So this is the core element. And I also guided on growth, especially in NET-A-PORTER, MR PORTER already in the second half of this fiscal year to show growth. And this will obviously also help on the -- on a ratio logic that from a lower expense base to then have obviously profitability improvement on the whole group reembarking on the growth trajectory again. And it always helps to be the #1 worldwide to really push also on the growth side.

Yes. And let me talk about geography. We continue to see very good traction in the U.S. We highlighted it in our script, that it is actually the fastest at accelerating geography. Europe, excluding Germany, very stable growth rates. So we are across all the segments happy with that -- these 2 geographies. On the YOOX side, as we said, we are really focusing on the healthy core, which is Europe. So we intentionally drive business in Europe. Asia has stabilized, obviously at a low level. So we are really looking forward to continued growth in the short term in the U.S. and Europe. There may be upside opportunity now in China, but probably still early to say. And I just want to highlight that as a group, 31% of our business is now in the United States. So we feel very good about our U.S. business and our scale in the U.S. now.

Appears to be no further questions at this time. This does conclude today's call. Thank you for attending. You may now disconnect.