On Friday, Morgan Stanley updated its outlook on MYT Netherlands (NYSE: MYTE), increasing the price target to $3.75 from $3.50, while maintaining an Equalweight rating. This adjustment follows Mytheresa's unexpected positive preliminary announcement of its third-quarter results for fiscal year 2024.
The luxury e-commerce platform reported preliminary net sales growth of 15-18% year-over-year for Q3, exceeding the consensus expectations of 11% growth, with figures reaching approximately €230-235 million, surpassing the anticipated €221 million. Growth is believed to be propelled by strong performance in the U.S. market and sustained demand from top-tier customers.
Despite net sales outpacing expectations, Gross Merchandise Value (GMV) is projected to grow by 12-15%, which is slightly lower than the net sales growth. This is attributed to the underperformance of certain brands within the company's portfolio, specifically mentioning Kering (EPA:PRTP) brands as an example.
The company also anticipates an adjusted EBITDA margin in the range of 3-4%, which is in line with or slightly better than the consensus estimate of 3.5%. This suggests an adjusted EBITDA of €6.9-9.4 million, which would be above the midpoint consensus of €7.8 million.
Morgan Stanley expects that Mytheresa's gross margin will continue to be affected by promotions, albeit to a lesser extent, as the market adjusts to lower levels of excess inventory. This aligns with previous management comments expecting a reduced intensity of promotions due to a decrease in excess inventory and a cautious approach to ordering for the spring-summer 2024 season.
The report also anticipates that the company's operational expenses, particularly marketing costs, were well-managed in the third quarter, benefiting from a less competitive environment and resulting in lower customer acquisition costs.
Mytheresa's management expressed satisfaction with the company's performance, citing it as a strong showing in a consolidating market. The full Q3 report is scheduled to be released on Wednesday, May 15, 2024.
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