Emles Luxury Goods ETF (LUXE) Q3 2026 Earnings Report, Transcript and Summary

Greetings, and welcome to the LuxExperience Third Quarter of Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions] 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 Third Quarter of Fiscal year 2026. With me today is our CEO, Michael Kliger. . Before we begin, I would 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 third quarter of fiscal year 2026 of LuxExperience. We are very pleased with the results of the third quarter. We are making great progress with the ongoing transformation as a group. We achieved a GMV growth of plus 0.3% at constant currency in the third quarter, despite the outbreak of war in the Middle East in March. We also achieved a profitability at group level of plus 0.9% in adjusted EBITDA margin which is the second profitable quarter in a row. Finally, we achieved again significant improvements on many KPIs across all three business segments underlining the successful execution of our transformation plan. We are fully on track and will achieve our guided results for the full fiscal year 2026. Our success story with our Mytheresa business continues as we outpaced the market in terms of growth and further improved our profitability despite the geopolitical headwinds in March which, in the meantime, have subsided for our resilient customers base. We also saw further improvements at NET-A-PORTER and MR PORTER, driven by the new strategic focus on customer service, full price selling and cost discipline. At YOOX, our strategy focusing on the healthy core of the business and the good progress in implementing a leaner operating model continues to show clear results in line with our expectations. In addition to our guidance for fiscal year 2026, we, therefore, also confirm our medium-term target for the group, with net sales of EUR 4 billion, and an adjusted EBITDA margin of 7% to 9%. Just to provide context for the EUR 4 billion net sales medium-term target, the most recent Bain and Altagamma report estimates the global online luxury market at EUR 75 billion. Overall, LuxExperience is the clear digital multibrand leader for luxury enthusiasts globally. And we are perfectly positioned to benefit from the sustained growth of digital luxury and the ongoing consolidation within the sector. Before reviewing the performance of the third quarter further, I also want to mention that we have successfully closed the sale of the set of assets powering the Outnet on April 30, following the binding agreement announced last October. We are very confident to have found the right new home for the outlet and we now are able to solely focus on our YOOX business in off-price. Let me now comment on the performance of the Mytheresa business in more detail. We are very pleased with the strong results in the third quarter of fiscal year 2026, which are fully in line with our expectations. Mytheresa's clear focus on wardrobe building big spending luxury customers and their need through inspiration by curation highest quality service and community building with physical events drove again strong profitable growth. Our very resilient, consistent business model and excellent execution allowed us to achieve this despite the headwinds from the outbreak of war in the Middle East. In Q3 of fiscal year 2026, Mytheresa grew its net sales by plus 9.9% on a constant currency basis compared to Q3 of fiscal year 2025. In the first 9 months of fiscal year '26, net sales grew by plus 12.0% on a constant currency basis in the United States, which is a key market for growth, net sales growth reached plus 33.8% on a constant currency basis in Q3 fiscal year '26 compared to Q3 fiscal year '25. In the third quarter, the U.S. accounted for 25.8% of net sales of our total Mytheresa business. While we saw in March, the impact of the war in the Middle East on customer sentiment globally, we have already seen again, strong growth in the business in the last weeks. This proves the resilience of our business model as our clients are globally mobile and dip in sentiment are mostly short-lived. Mytheresa's financial strength and continued growth are driven by this outstanding customer base. In the third quarter of fiscal year 2026, the top customer base of Mytheresa grew by plus 18.6% compared to the prior year period. Furthermore, the average spend for top customer in terms of GMV remained quite stable with minus 1.5% in Q3 versus Q3 fiscal year 2025. The average order value last 12 months from Mytheresa increased by plus 12.5% to a record high EUR 847 in Q3 fiscal year '26, demonstrating the success of our focus on selling full price, high-end luxury products to top customers. Furthermore, Mytheresa gross profit margin grew by 240 basis points in Q3 fiscal year 2026, which further underlines our successful strategy of full price selling. Lastly, Mytheresa's customer satisfaction, which we measure by our internal Net Promoter Score reached 86.8% in Q3 fiscal year '26, representing the highest quarter score in the last 4 years. All these figures serve as a testament to the fundamental strengths of our Mytheresa business. Our success with big spending Wardrobe-building customers makes Mytheresa a highly desired partner for luxury brands. In the third quarter of fiscal year 2026, we saw, again, many high-impact campaigns and exclusive product launches, underlining Mytheresa strong relationships with luxury brands. We were the exclusive prelaunch partner for Demna Gvasalia of Balenciaga, as Creative Director, Gucci with the LaFamilia collection for women and menswear. We also prelaunched styles of Balenciaga and Alias runway collections as well as of Saint Laurent Summer '26 collection. We launched exclusive runway looks from Loewe and Bottega Veneta's Spring/Summer '26 collections for womenswear and menswear. It is also very noteworthy that we launched the namesake brand of Phoebe Philo on our website in March. Please see our investor presentation for more details on these capsules and exclusives. In addition to creating the variability for our top customers, really exclusive digital campaigns and product launches, Mytheresa also creates desirability and a sense of community for the top customers through unique money-can't-buy physical experiences. Highlights included an intimate Valentine's Day, Cocktail, Mytheresa hosted together with Khaite in attendance of the Creative Director Catherine Holstein at The NoMad Bar in New York. In Florence, Mytheresa created a 1-day experience with Gianvito Rossi for his namesake brand. Guests enjoyed a private visit to the [ Vasari Corridorc ] followed by a Garden welcome and dinner at Villa Cora. Another highlight was an industry cocktail event in Shanghai that we hosted for executives and key partners from leading luxury brands at the iconic Spago, Shanghai, reinforcing Mytheresa's commitment to further strengthen its presence in the Chinese market. Finally, Mytheresa continue to offer guests a captivating experience at the Maison Mytheresa pop-up in [indiscernible]. The setting brought Mytheresa's world to life through trunk shows, presentations and workshops for invited guests. Please see our investor presentation for more details on these unique money can buy experience. To sum it up, Mytheresa delivered strong profitable growth, fully in line with our expectations in the third quarter. We see this as further proof of the strength of our business model and consistency of our execution. Martin will later show how the strong top line results translated into excellent bottom line results. Let me now comment on the luxury segment comprised of NET-A-PORTER and MR PORTER. In the third quarter of fiscal year 2026, we saw continued improvements as a direct result of the new strategic focus on full price selling, cost discipline and on customers seeking editorial inspiration and brand discounting. In Q3 fiscal year 2026, net sales declined by minus 5.1% on a constant currency basis versus Q3 fiscal year '25 for NET-A-PORTER and MR PORTER combined. In the first 9 months of fiscal year '26, net sales declined by minus 1.6% on a constant currency basis. Europe, excluding the U.K., increased by plus 4.3% in terms of net sales in Q3 fiscal year '26 compared to the prior year period. The overall net sales decline was driven by the ongoing strategic focus on higher-value customers and the reduction of promotions compared to Q3 fiscal year '25. While we saw in March, also the impact of the war in the Middle East on customer sentiment globally, we see again solid growth for NET-A-PORTER and MR PORTER in the weeks since end of March. Thanks to the resilience of our customer base to such exogenous shocks. While the overall top line for NET-A-PORTER and MR PORTER combined declined in Q3 fiscal year '26, the average spend in terms of GMV per EIP, the so-called extremely important people, was quite stable with only minus 1.4% in Q3 fiscal year '26 versus Q3 fiscal year '25. The average order value last 12 months again increased by plus 7.9% to EUR 865 from NET-A-PORTER and MR PORTER combined. The gross margin increased by a high 700 basis points in Q3 fiscal year '26, driven by a higher share of full price sales and significantly reduced discount activities versus last year's period. The customer satisfaction at NET-A-PORTER, measured by our internal Net Promoter Score has seen a consecutive improvement from 62.3% in Q1 to 65.3% in Q2 and now 68.1% in Q3, which is an increase by plus 890 basis points compared to Q3 fiscal year '25. The secret sauce of LuxExperience is clearly showing its effect. All these KPIs point to a significantly improved health and quality of the business of NET-A-PORTER and MR PORTER combined. In the third quarter of fiscal year 2026, NET-A-PORTER and MR PORTER continued to drive customer engagement through uniquely engaging editorial content and unique EIP experiences. NET-A-PORTER invited VIPs, pacemakers and EIPs to an exclusive 3-day winter experience, including snowshoeing, stargazing and evenings at a hidden speak easy cabin in the newly opened One&Only resort in Big Sky in Montana. During fashion months, NET-A-PORTER celebrated New York Fashion Week with the dinner hosted with Willy Chavarria, attending guests included Julia Fox, Jack Harlow, Becky G, [indiscernible], to name just a few. During London Fashion Week, NET-A-PORTER partnered with Jonathan Anderson, for a private tour of his brand new JW boutique exclusively for NET-A-PORTER EIPs. Moreover, NET-A-PORTER launched its Spring/Summer '26 campaign, Le Virage, in March. The series of video first vignettes, storytelling and celebrating the new season's key fashion achieved a global media reach of over 64 million impressions. MR PORTER featured exclusive interviews with Hollywood icons Jon Hamm and Kit Harington on the MR PORTER Journal. Jon Hamm story reached 2.4 million views on Instagram. A video story about Danish brand NN07 reached over 5 million views. MR PORTER also created global EIP events, including a 2-day immersive style suite in Hong Kong, a co-hosted brand dinner with bespoke Shoemaker, George Cleverley in Miami and invited 10 guests to an intimate lunch hosted by Sir Paul Smith in London. MR PORTER also launched exclusive capsules such as a 48 -- piece capsule with Brunello Cucinelli. Please see our investor presentation for more details on NET-A-PORTER and MR PORTER'S unique editorial content and exclusive events. In summary, the third quarter is seeing further sequential improvements at NET-A-PORTER and MR PORTER fully in line with our ongoing transformation plan, both businesses despite the headwinds from the war in the Middle East in March. That, by the way, have already decreased significantly in recent weeks. Martin will later provide more details on the progress achieved in bringing the NET-A-PORTER and MR PORTER Luxury segment back to profitability rather soon. Lastly, let me comment on YOOX performance in the third quarter of fiscal year 2026. We are pleased with the progress of the ongoing transformation of YOOX, including a focus on core countries and the implementation of a leaner operating model to better serve a lower margin and low AOV nature of the off-price business. In parallel, YOOX celebrated a brand rebirth with the successful launch of its new brand identity in line with its new strategy and positioning. In Q3 fiscal year 2026, net sales declined by minus 7.4% on a constant currency basis versus Q3 '25 for YOOX. In the first 9 months of fiscal year net sales declined by minus 8.9% on a constant currency basis. In Europe, excluding the U.K., a clear geographic focus going forward, net sales increased by plus 7.0% compared to Q3 fiscal year '25. The overall net sales decline is mainly driven by the reduction of weight of overseas markets with high cost to serve, in line with the renewed focus on a healthy geographic core for the YOOX business. While the overall net sales decline for YOOX in Q3 fiscal year '26, the top spending customer average spend in terms of GMV grew by plus 1.3% in Q3 fiscal year '26 versus Q3 fiscal year '25. The average order value last 12 months increased by plus 1.7% to EUR 247 in Q3 fiscal year '26. The gross profit margin increased by 620 basis points to 37.5% in Q3 fiscal year '26 as compared to 31.3% in the prior year's quarter, demonstrating the success of the new strategic focus on the healthy core. YOOX customer satisfaction measured by our internal Net Promoter Score reached 48.8% in Q3 fiscal year '26 increasing by plus 1,270 basis points compared to Q3 fiscal year '25, showcasing also the effect of the LuxExperience secret sauce on YOOX customer service operations, all the above KPIs indicate that the focus on the healthy core of the YOOX business is bearing fruit. In the third quarter of fiscal year '26, YOOX celebrated the rebirth of its new brand identity, in line with its new strategy and positioning. YOOX unveiled its future color scheme, proprietary layouts and a renewed tone of voice in March. The rebranding has been rolled out on digital channels with full implementation, including new app and website interfaces and off-line packaging planned until the end of the year. The brand rebirth story drove strong media coverage. Please see our investor presentation for more details on the new brand identity. Moreover, YOOX leverage cultural moments across Milan and Berlin to create memorable experiences, signaling the brand's rebirth. In Berlin, YOOX, together with Sleek Magazine hosted an exclusive party during Berlin Fashion week at the famous Borchardt restaurant that seamlessly blended design, culture relevance and community. During Berlinale, YOOX challenged the imagination through a movie-inspired experience at the Italian Embasy party. In Milan, YOOX hosted its timeless brand event unveiling Camarillo, a fitting room installation and new stage for self-expression creativity and reinvention. The event brought together KOLs from the fashion industry and lifestyle media at Palazzina Appiani at the heart of Milan Fashion Week. During Milan Design Week, YOOX introduced in Camarillo unveiled by Pietro Terzini. The project was selected as one of the district's highlights and was introduced during the official press conference. All events boosted customer engagement through community building, delightful experiences increased the guests emotional bond with YOOX and generated reach on social media and trade coverage. Please see our investor presentation for more details on these events. To sum it up, the focus on a healthy core for YOOX continues to show clear improvements in line with our expectations and the brand rebirth of YOOX with a new brand identity and new customer focus has only just begun. Let me now also provide you with a quick overview on the application and usage of AI at Luxexperience as we have received questions on our approach to this technological seismic shift. For a long time, we have used intelligent algorithms to optimize our customer targeting and marketing spend based on predictive models for customer value estimates. With the revolution of generative AI, we have expanded widely the usage of algorithms to improve the customer experience with better and more personalized, real-time content such as product and newsletter, [indiscernible], on-site search, on-site merchandising as well as product copy and imagery. We are live here based on our partnership with Google Vertex. We are also seeing huge benefits in software development to support our aggressive tech transformation road map at NET-A-PORTER and MR PORTER. We are constantly expanding the use case scenarios with a clear focus on improving the quality and accuracy of our customer experience. Please see our investor presentation for more details on the usage of AI at LuxExperience. And now after having reviewed the very good commercial results, and improvements across all our businesses, I hand over to Martin to discuss the financial results in detail.

Thank you, Michael. As Martin mentioned, we are very pleased with our strong results in Q3 of fiscal year '26, running from January to March 2026, despite headwinds from the Iran conflict. We again achieved a positive adjusted EBITDA margin at plus 0.9% in the quarter. This is a significant improvement from the minus 3.2% in the previous year Q3. Despite our focus on improving profitability with deliberately accepting lower sales at that MR P and we were able for the whole group to keep net sales stable in the quarter. For the first 9 months of the fiscal year, net sales grew by plus 1.6% on constant currency. I will detail the second performance a little later, but already want to highlight our continued success at Mytheresa. There, we again outgrew our peers in the quarter with plus 9.9% net sales growth at constant currency, taking significant market share and boosting Mytheresa's adjusted EBITDA profitability by plus 50% compared to the previous year quarter. In addition to our continued success in strengthening our target customer relationships at all store brands, we also see that the cost initiatives in our transformation plan are working effectively. SG&A costs in Q3 are down minus 12% or minus EUR 15.9 million compared to the previous year period, including capitalized IT costs in previous year. Compared to previous Q2, just 3 months ago, they're down minus 8.6%. In line with simplifying our group structure and focusing our transformation efforts we have successfully closed the sale of the outlet end of April. We continue to diligently execute our transformation plan, fully in line with our expectations and confirm our medium-term targets of EUR 4 billion in net sales and an adjusted EBITDA margin of 7% to 9%. I will speak later to our expectations for the full fiscal year '26 ending in June '26. I will first review LuxExperience performance at group level and then walk you through the performance of our 3 business segments. Luxury Mytheresa, Luxury NET-A-PORTER, MR PORTER and Off-Price business of YOOX in more detail. In this call, I will focus top line development on net sales. Our GMV numbers follow a similar pattern and are, as always, fully disclosed in our press release and quarterly report. Unless otherwise stated, all numbers refer to euro. In Q3 of fiscal year '26 and at group level, we kept net sales stable in relation to Q3 of previous year, and despite deliberate focus on more profitable customer segment at Net, MR P and YOOX and despite headwinds from the Iran conflict. In the first 9 months of this fiscal year, net sales grew by plus 1.6% at constant currency. On a reported level, Net sales in the quarter declined by minus 5.2% given the wide euro-U.S. dollar FX movements since last year. For the full fiscal year, we continue to expect reported GMV at around EUR 2.6 billion and net sales at around EUR 2.5 billion. Our SG&A transformation initiatives are clearly visible also at group level. With significantly decreasing our SG&A expenses and despite lower reported top line, our SG&A cost ratio improved again in this quarter. Compared to the preceding Q1 and Q2 of fiscal year '26, the SG&A cost ratio decreased 360 basis points from 21.9% in fiscal Q1 and 19.1% in fiscal Q2 to now 18.3% in Q3 fiscal year '26. In Q3 of fiscal year '26, adjusted EBITDA margin on group level was positive at plus 0.9%, significantly improving from the minus 3.2% in previous year Q3. This is the second consecutive quarter with positive adjusted EBITDA profitability due to the phasing effects between Q3 and Q4, we expect Q4 of the fiscal year to also be around Q3 levels of adjusted EBITDA profitability. For the full fiscal year '26, we expect to break even on adjusted EBITDA, fully in line with our guidance of minus 1% to plus 1%. In the first 9 months of the fiscal year, operating cash flow was at minus EUR 117.9 million. We expect that the operating cash burn for the full fiscal year '26 will stay below this level. This is significantly better than our guidance of a minus EUR 150 million maximum operating cash burn. As a reminder, 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 minus EUR 350 million and minus EUR 450 million. We expect to break even on an operating cash level in around 2 years. The group ended Q3 of fiscal year '26 with cash and cash financial investments of EUR 436.1 million. Together with our revolving credit facilities, our total available funds are at EUR 612.8 million. We are in an ideal situation to operate a fully funded transformation and our growing business model completely debt free. Let's now review the performance of our Mytheresa business. During the third quarter of fiscal year '26, net sales grew by plus 9.9% on a constant currency basis to EUR 256.0 million compared to the prior year period. In the first 9 months of the fiscal year, net sales grew by plus 12%. On reported numbers, net sales grew by plus 5.6% in the quarter and plus 8.7% in the first 9 months. We continue to significantly take share in overall soft market and with headline from the Iran conflict. For the full fiscal year and on reported numbers, we expect Mytheresa to grow net sales by a high single-digit number. In Q3, Mytheresa gross margin increased by 240 basis points to 47.1% as compared to 44.8% in the prior year period. We were able to, again, significantly increase the gross profit margin with our continued focus on full price sale. This continued success on gross margin level is even more impressive, but at the same time, we are capturing market share with significant top line growth. In Q3 of the fiscal year and driven by the new U.S. tariff situation, the shipping and payment cost ratio was up 250 basis points compared to Q3 of fiscal year '25. As we pay all duties for our U.S. customers, the cost increase for us is reflected in our shipping and payment cost ratio. We are carefully monitoring and managing duty rate changes in the U.S. In Q3 of fiscal year '26, the marketing cost ratio decreased by 40 basis points from 10.1% in Q3 of fiscal year '25 to 9.7%. This is mostly due to a phasing effect between fiscal Q3 and upcoming fiscal Q4. We therefore expect the marketing cost ratio in Q4 to be higher due to promotional marketing costs shifting into Q4. The selling, general and administrative, SG&A, cost ratio decreased by 80 basis points to 12.2% compared to the prior year quarter due to continuous cost leverage. Below and manageable SG&A cost ratio at Mytheresa has proven effect for the resilience of our business model. The focus of our transformation plan is to implement this resilience also at Net, MR P and YOOX. Subsequently, the adjusted EBITDA margin at Mytheresa expanded 160 basis points during the quarter to 5.5% as compared to 3.9% in the prior year period. In absolute terms, adjusted EBITDA grew by plus 50% to EUR 14.1 million versus the prior year quarter. For the first 9 months of our fiscal year, the adjusted EBITDA margin significantly improved 190 basis points from 4.3% to 6.1%. In absolute terms, adjusted EBITDA grew by plus 56.6% to EUR 44.5 million in the first 9 months of the fiscal year. Due to the phasing of some cost items from Q3 into Q4, we expect Q4 to have a similar overall profitability margin of Mytheresa compared to Q3. We are continuing our active inventory management with inventory levels at Mytheresa, up only 3.1% compared to prior-year period despite continuous strong top line growth. Let me now comment on the Luxury NET-A-PORTER and MR PORTER segment in more detail. In the third quarter of our fiscal year '26, net sales declined by 5.1% constant currency basis to EUR 231.6 million. In the first 9 months of the fiscal year, net sales declined by 1.6%. This is a strong sequential improvement versus the same period in fiscal year '25. On a reported basis, net sales decreased by minus 11.7% in the quarter. The top line decline was a deliberate action to focus on higher value customers and to reduce the promotion intensity compared to the previous year quarter. This is visible in the 700 basis point increase in the gross profit margin. The gross profit margin in Q3 of fiscal '26 increased to 48.5% from 41.6% due to a higher full price share and reduced discounting activities as compared to prior year. For the first 9 months of the fiscal year, the gross profit margin increased by 250 basis points to 47.3%. With growth in fiscal Q4, we expect Net and MR P to have net sales decline by only a mid-single digit for the full fiscal year '26, our focus of our transformation plan remains on bringing down the SG&A expenses. SG&A expenses in quarter decreased by minus EUR 5.6 million or minus 8.9% compared to previous year. A strong decrease of SG&A expenses as well compared to the preceding quarter, which was fiscal Q2. SG&A expenses went down by EUR 9 million or minus 13.7%. In the first 9 months of the fiscal year, SG&A cost savings amount to EUR 18.0 million or minus 8.8% of the cost base. All these comparisons include capitalized IT expenses in the previous year for better transparency on the true cost base. With reembarking on top line growth in coming quarters, the SG&A cost ratio is expected to improve even further. The 23.4% SG&A cost ratio in this quarter compares to the 12.2% of Mytheresa and signals the more than 1,000 basis points opportunity for us to achieve significant cost savings. We will continue to bring down this difference with adjusting the operating model, the IT replatforming, corporate overhead cost savings and reembarking on top line growth. Warehouse closures are executed and the delivery models are being adjusted. Studio and customer care operations have already been consolidated. The unified data platform is fully productive and the overall IT replatforming is being executed according to plan. The layoff programs in all jurisdictions are now fully concluded with full effect to be visible in Q4 of fiscal year '26. In sum, our comprehensive turnaround plan until fiscal year '28 is being executed diligently and fully in line with our expectations. With the significant improvement in the gross profit margin, the Net, MR P segment, again, almost broke even in this quarter with an adjusted EBITDA margin at minus 0.5%. Therefore, also on bottom line, a significant sequential improvement from the minus 2.5% adjusted EBITDA margin in the first 6 months of the fiscal year. Inventory levels at Net, MR P are slightly up, plus 2.8% to previous year. And going forward, we will continue to enable top line growth at Net, MR P with adequate working capital. Let me now review the financial performance of the off-prices of YOOX, in line with our transformation plan. At YOOX, we are focusing on the healthy core of the business, deprioritizing overseas market with high cost to serve, discontinuing unprofitable marketplace model and implementing a lean operating model, supported by a simplified off-price tech environment. Continuing the path of a more comprehensive restructuring effort at YOOX and we focus on the profitable customer core. Net sales declined minus 7.4% on a constant currency basis in Q3 year-over-year to EUR 130.7 million. On reported numbers, net sales declined by minus 11.4%. This is a sequential improvement of minus 12.1% in the first half of the fiscal year. Same as in the Net MR P segment, A focus on the healthy core customer is visible in improvements in the gross over margin. In Q3 of the fiscal year, the gross profit margin at YOOX increased by 620 basis points to 37.5%. In the first 9 months of the fiscal year, the gross profit margin increased by 250 basis points to 38.9% from 36.4% in the prior year period. The operational focus of YOOX is on a fulfillment model that is profitable. creating a lean business model that specifically tailored to the lower gross margin and lower AOV nature of the off-price business. In addition to lower duties and therefore, reduce shipping, payment costs, a core focus of our turnaround plan is to bring down the SG&A cost ratio also at YOOX. The SG&A cost ratio in this quarter was at 22.0% of GMV, down from 26.9% in the previous quarter and 29.5% in from Q1 of the fiscal year and despite the significantly lower top line. With this, the SG&A cost ratio in this quarter showed an improvement of 490 basis points compared to the previous two and 750 basis points improvement compared to Q1 of the fiscal year. On an absolute level, SG&A expenses in Q3 of fiscal year '26 decreased by EUR 10.3 million or minus 26.4% compared to previous year Q3. In the first 9 months of fiscal year, SG&A expenses decreased by minus EUR 17.9 million or minus 15.5%. All these comparisons include capitalized IT expenses in the previous year for better transparency on the true cost base. And these cost savings were achieved despite the stranded costs from the separation of the output. We are significantly streamlining warehouse, studio and customer care operations. The tech legacy cleanup and simplification is going well and with full speed. Corporate costs have turned down and aligned to a lean business model. And with a focus on healthy European targeted growth, the SG&A cost ratio will continue to decrease to the targeted levels. During the third quarter of fiscal year '26, the adjusted EBITDA margin improved from minus 17.3% in Q3 of fiscal year '25 to minus 5.5% in Q3 of fiscal year '26. The minus 5.5% in this Q3 was also a sequential improvement from the minus 10.9% of the first 6 months of fiscal '26 despite deliberate top line contraction. With the execution of our defined transformation measures, we expect to return to adjusted EBITDA profitability of YOOX in 12 to 15 months and return to top line growth already into fiscal year '27. Inventory levels at YOOX are minus 11% to previous year. In fiscal '26, which will end next month in June, we're seeing exceptional growth at Mytheresa gaining market share with significantly improved profitability. Net MR P is expected to break even in the second half of this fiscal year and is reembarking on top line growth as of Q4 of this fiscal year. Net MR P and YOOX are reporting improved gross profit margins and continuously improving SG&A expenses. Therefore, on group level and for the full fiscal year, we continue to expect reported GMV at around EUR 2.6 billion and net sales at around EUR 2.5 billion. On the bottom line, we expect to break even on adjusted EBITDA, fully in line with our guidance of minus 1% to plus 1%. Same as last year, we will communicate our fiscal year '27 guidance in our Q4 earnings call. In line with the visible success of our transformation plan, our trajectory towards our medium-term targets remain unchanged. We confirm our medium-term targets with EUR 4 billion net sales and an adjusted EBITDA profitability of plus 7% to 9% and the return to 10% to 15% annual growth rates. We will continue our track record of diligently executing our plan and delivering what we target. And with this, I hand over to Michael for his concluding remarks.

Thank you, Martin. We are very pleased with our third quarter fiscal year 2026 earnings results. The third quarter came in fully in line with our expectations for the full fiscal year 2026 for the group. LuxExperience has delivered strong results and is fully on track with its transformation plan targets for NET-A-PORTER, MR PORTER and YOOX. Mytheresa continues to deliver profitable growth above industry standards, proving the strength and consistency of its business model. At LuxExperience, we possess the secret sauce in digital luxury creating a community for luxury enthusiasts around the globe. As a group, we are perfectly positioned to benefit from the sustained growth of digital luxury and the ongoing consolidation within the sector, allowing us to capitalize on significant market opportunities. We will continue to generate significant value for our customers, brand partners and shareholders as we reach our medium-term targets. And with that, I ask the operator to open the line for your questions.

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

Hi, Michael, Martin, regarding revenue growth and what you're seeing. I would love your thoughts on the markets and the regions, Asia, U.S. and Europe in terms of key trends. And also if there was upside or downside, overall revenues were a bit lower than Street. So your thoughts there as well as interplay with some of your comments on duties and then there's a lot of geopolitical events happening, obviously. A follow-up question, Martin, operating cash burn, better than you expected. It sounds like you're making a lot of outsized progress on the SG&A side. But what led to that? And then as we look forward to EBITDA margins, in the mid- to high single-digit range longer term. What are your thoughts given that you're making so much progress. It sounds like the fixed cost leverage is a big opportunity as you work towards the 7% to 9% adjusted EBITDA margins over the years going forward.

Thank you, Oliver. Let me take the geographic question and then Martin can come back to the cash burn and the long -- medium-term EBITDA margin expectations. So in terms of geography, we still -- we see continued strength in North America as evidenced by the almost 34% growth of Mytheresa in that region. As mentioned or discussed last time in the quarter -- quarterly earnings, Asia has seen sort of the bottom and then there are little shoots -- green shoots of improvements. And therefore, we also continue to invest in the region. The Middle East was particularly the Arabic Peninsula was a very strong region. And thus, as highlighted, the outbreak of war in Iran was clearly a headwind in March. We are very pleased to already state and observe that, that dip has subsided. The headwinds have decreased. We are dealing with a very mobile global audience that is able to relocate and also the global sentiment that had suffered in March is fully back. So we see full strengths since the beginning of the last quarter, but still it impacted the quarter, the Q3, we just reported on. In Europe, there are some very strong markets, particularly the Southern markets in Europe, where we see good influx of money of rich population, and that drives, of course, the demand for luxury group products. So the strength in Europe -- solid strength in Europe and the buoyant market in the U.S. is really in terms of geography driving our business. And as mentioned, the dip in the Middle East seems to have already gone away looking at the current trading. Martin, do you want to pick up the other two?

Yes, I'm happy to answer that, Oliver. Operating cash burn in the last 9 months, you actually called that out minus EUR 118 million, obviously, very much on Q3. As guided, Q3 typical seasonality cash out and also paying out most of the severance packages from the transformation plan of a layoff program of 700 people. So as expected in Q4, we expect a slightly positive cash flow. So we would clearly guide that the cash -- the operating cash burn of EUR 118 million will be significantly lower to the EUR 150 million, which is great, which is good news, and it just shows our continuous focus on costs. You saw that in the increasing gross profit margin, diligently executing also the cost measures, and we will continue to do so. So there is a as a continuation of the diligent execution of the transformation plan, which is the core driver of the operating cash burn in this fiscal year, what we estimate to be significantly lower than the originally guided maximum operating cash burn of EUR 150 million. And as pointed out, the focus -- the continued focus on SG&A expenses and the SG&A cost ratio highlighted hopefully, I highlighted that significantly in the call is also the key driver for achieving improvement in the adjusted EBITDA profitability. So for -- as we expect for this -- for the full fiscal year to break even. We then every year, will continue to see increasing adjusted EBITDA margins to 7% to 9% in the medium term, significantly driven by an improved SG&A cost ratio, and there is obviously one effect is the absolute reduction of SG&A expenses and reembarking our top line growth, which will also help on the SG&A cost ratios improvement.

Your next question comes from the line of Anna Glaessgen with B. Riley Securities.

I'd like to follow up on the questions on the impact from Iran and geopolitical headwinds. Was there any one segment that saw more of an impact? And if you could unpack if that was related to regional differences in mix or if it speaks to something within the core customer of that group?

Well, I mean, the most impacted region was, of course, our customers on the Arabic peninsula, being directly affected by war there and we had a few days of no deliveries, but what is more and understandably so, people were obviously occupied with different things than shopping. That direct impact has subsided slowly, but still the direct impact on the Arabic Peninsula is still significant, but what you always have to consider that our customer base is quite mobile, has multi-residence so we have seen, of course, that customers from the region have moved to other locations. So we don't ship into the region, but we still serve these customers in other geographies. And then with any of these quite shocking and significant news, there is also a global sentiment dip of insecurity. That is -- and that has been the fact for all of these unfortunate recent geopolitical events, that is often very short-lived and seems to be also short-lived here. So we did see a bit of hesitation in Europe, a bit of hesitation in North America after the outbreak of war, again, fully understandable, we -- our hearts and feelings are with all people that are affected by this. But since April, except for the specific region on the Arabic peninsula, we are fully back on track with strong growth.

Great. And then turning back to the GMV per top customer at Mytheresa, I think, declined 1.5% in the quarter, wondering if you could unpack that and should we expect that to return to growth in coming quarters?

I mean you have to really see that in connection with the massive increase of top customers. We really moved a significant cohort into this highest standard of our customer base. And as this sort of rejuvenate our top customer with a lot of new entrants, it is just mathematical that the average spend by moving so many new people into that higher status comes down a bit, I mean it's quite stable and therefore, quite remarkable that we move double-digit higher number into the top customer status and the average only declined slightly. And as we then sort of for better words, digest this massive increase in top customers, we will come back to the pattern that you have seen for many quarters now that the top base continues to spend more each quarter per capita.

Your next question comes from the line of Blake Anderson with Jefferies.

I just wanted to ask one more to start off on the Middle East conflict. Have you seen any impact on the cost side from higher energy or fuel cost that we should be considering, such as shipping or logistics?

I mean, again, the rates and the commodity prices have been quickly fluctuating up and down. But yes, carriers, of course, pass on surcharges that particularly in air freight have been levied. So that is a direct measurable impact. But again, all of that with our business model has to be seen in context of -- on Mytheresa and NET-A-PORTER, MR PORTER of average basket size of EUR 850. So the value of the products we ship let us quite rapidly mitigate those surcharges. Medium-term longer effects, we cannot observe. But that was a specific effect as soon as oil and combustion fuels have gone up in price.

Perfect. That's helpful. And then I wanted to just drill down on the Mytheresa U.S. business. That continues to be really strong I know there's some industry maybe tailwinds that you're experiencing there from consolidation. But as we think about that 30% plus growth rate and you're looking out over the next 12 to 18 months, how are you ensuring and planning for growth there and trying to sustain the momentum?

Absolutely. The U.S. market, the U.S. consumer is and has been for quite some time, a growth engine for Mytheresa and is also a growth engine for the group. And Martin explicitly stated that marketing cost in the Q4 will actually go up as we invest as we see opportunities to engage with clients, we are gearing up for a fantastic event in June in L.A., hopefully, the outbreak of wildfires is not risking any of that. We are returning to the Hamptons. We will have great engagement with -- on the NET-A-PORTER side, you heard about one of the only Big Sky event in Montana. We're investing. We think there is -- or we know and see and observe there is an audience that is reorienting itself in the retail landscape that is changing quite dramatically, and we want to capture as many hearts and souls as possible at the moment.

Got it. That's really helpful. And then on the Luxury YNAP business, I wanted to ask, you talked about pulling back on promotions and trying to have higher full-price selling. How much more work to go is there? I know you mentioned that I think top customers are around 10% of total customers. Can you remind us your percentage of sales from top customers and where you're trying to take that over time? And kind of what are the impacts we should see over the next few quarters from that strategic shift?

I mean the good news is that we started this process last April, as we took over the company. And so we are coming closer to having been fully in charge for 12 months. And therefor, with Q4, a lot of that sort of promo detox will have been done. So that's the good news. We stepped into right away. We fundamentally think it's the wrong approach. And therefore, we immediately start stripping out those promotions and discounts. And as highlighted in the call by Martin, the significant increase in gross profit margin in this quarter, because we were actually lapping a highly promotional quarter last year, which was effective in the last quarter under previous management. In terms of the share, we absolutely see it as the right target to have the same share of top customer business. And if you look into our investor presentation, top customer share of total customers in terms of size was 9.7% for Mytheresa in that quarter that we just reported and 10% for -- sorry, was 9.7% for Mytheresa and 10% for NET-A-PORTER. So we are getting there. And the famous 4% making 40% ratio is absolutely something that we aspire to deliver also for NET-A-PORTER, MR PORTER.

Your next question comes from the line of Wendy Gao with CICC. .

As we can see, the AOV, I think for all segments are going up, especially for the luxury and Mytheresa segments. So do you believe this is more driven by the increasing shares of top customers? Or is it more structural changes or any other reasons we should look for?

Thank you for your question. There are multiple factors, as always, and the ones you mentioned are right on higher presence of top customers. They buy into the higher price points into the more valuable products. So that's one. But we have been quite successful over the last quarters building out our fine jewelry business. It's fastest-growing subcategory on both sides, actually, on NET-A-PORTER, MR PORTER and on Mytheresa. We've added not just in the quarter we just reported Messika as a new fine jewelry brand. And so of course, adding to the mix piece is around EUR 50,000, EUR 80,000 has an immediate impact on the average AOV. So the fact, as you mentioned, contribute, but I just wanted to add that also increasing share of fine jewelry contributes to the ongoing increase in AOV.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.