Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| But I want to stress, our outlook for H2 is really based on the strengths in the top customer segment, which we have delivered quarter after quarter |
| The Impressive continued growth in the US of 17.4%, pushed the net sales share to now 19.9% versus 17.6% in the prior year quarter |
| However, these macro headwinds actually allowed us to demonstrate the fundamental strength of our business model |
| We grew the company's top line and strengthened our bottom line |
| We achieved double-digit revenue growth in the United States |
| We reached a record average order value of €672 LTM and posted a gross profit margin of 50% in the second quarter |
| Our resilient business model and our clear focus on the high spending wardrobe-building top customers allow us to win market share in the current market environment, and we are thus well positioned to benefit and accelerate when market conditions will improve |
| First, the excellent growth prospects for digital luxury has not changed at all |
| As the market starts to improve we hope to also see some better growth in shoes and bags |
| Second, our clear focus on big-spending wardrobe-building top customers enabled us to generate solid growth in the second quarter and makes us a key partner for all our brands in their own clienteling efforts |
| And therefore, we are very comfortable to benefit from this trend even beyond gaining market shares from other players |
| Market share gains, resilient financials, best-in-class customer economics and ongoing innovation for future growth make us clearly stand out in the current market environment |
| Our focus remains strongly on the big water building, spenders that have to start better economics as the far better loyalty ratios and have the far higher average order value |
| So we will obviously see that and expect that to happen in the next quarter in an improvement in this gross profit situation |
| And so the core message in all of this very complicated technicalities is that we expect that the gross profit margin reduction will get lower, will improve given the spring/summer 2024 situation, given our strong position in the market and giving our top customer focus |
| Second, our clear focus on big-spending wardrobe-building top customers enabled us to generate solid growth in the second quarter of fiscal year 2024 |
| The H2 implies an acceleration of top-line growth to achieve the guided ranges at the low end and our statement that at least the first couple of weeks confirm our confidence that we will achieve our guidance implies exactly what you just stated |
| This solid growth is above market performance and above peers, which mostly shrank |
| It is highly noteworthy that the United States generated again an outstanding growth was plus 17.4% in terms of net sales compared to Q2 of fiscal year 2023 |
| I mean that is exactly the timeframe of which we just reported strong financial numbers |
| So continued decrease in inventory levels coming down, that has a positive cash effect as you rightfully called out and we increased the revolver to capture growth opportunities to see how we can increase our market share going forward in the special situation |
| And so with that segment spending, with that segment having its high loyalty to our curated offer, we already are in a very strong position and are in a position to deliver our guidance |
| We continue to drive our strong numbers with that segment |
| The second quarter saw again mainly high-impact campaigns and exclusive product launches, demonstrating our strong relationships and the support from our brand partners |
| All of them further increased our brand awareness, brand equity and positioned us globally as the leading digital luxury platform |
| The margins this quarter were better than we expected |
| And with that level, we are always able to have a consistent strong gross profit margin level |
| And thus, the main outlook is strong US market, even a slight recovery there on the aspirational customer, continued strength globally of the big spenders everywhere |
| But as mentioned by Martin, we are very confident with our guidance, based on the further acceleration of the already strong performance in Q2 |
| This inventory level and strategic path on inventory management is in line with our luxury positioning and successful inventory strategy over the last five years with superior gross profit margins achieved |
| Statement |
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| As expected, we continue to see slow demand for aspirational customers across all geographies and high promotional intensity in the market due to excess stock of fall winter merchandise |
| I mean the overall message is that the operating gross profit margin slippage is going down from 400 basis points to 300 basis points |
| The overall gross profit margin slippage is going down from 740 basis points to 490 basis points |
| If you consider only the operational gross margin, then the margin slippage is at 300 basis points in the quarter, down from 400 basis points in Q1 |
| And there, we saw the decline in the operating margin slippage of 300 basis points |
| Second is, on the gross margin, could you throw some color? I mean, from what I understand is most likely in this quarter to the CPM brands would have underperformed, given what Kering has reported and things like that |
| Even though our gross profit margin continues to be affected by continuous promotional environment, the margin slippage during the second quarter narrowed as expected to 490 basis points from 740 basis points in Q1 |
| So if your gross margin is going to continue to slip on a year-over-year basis in fiscal 3Q 2024, then your gross margins would be much lower than the high to high 40s that you need to be able to hit the 8% to 13% growth target |
| As the operational gross margin slippage is driven by fall/winter 2023 overstock in the market, we expect the operational gross margin slippage to reduce further in the coming quarters, in line with lower additional financial effects from inventory depreciation, CPM share, and shifts between quarters |
| And so while I can see scenarios that disruptions at other players may cause continued negative situations in markdowns and promos, I actually believe with what we have seen last year, starting in September, October, November, with two significant players struggling |
| This comes in a challenging macro environment and with persistent heavy promotions from peers |
| And that effect is about 50 basis points to 60 basis points in the gross profit margin slippage |
| There's a lot of uncertainty and with other multi-brand players we have, of course, significant customer overlap |
| In Rest of World, we saw overall stability with a slightly declining share from 26.1% to 24.5%, mainly due to softer demand in APAC |
| And so we stayed true even in the last quarters on this focus of strong full price and the lower gross profit margin as called out in the last two quarters, so Q1 and Q2 of our fiscal year was driven by excess inventory in the market for winter 2023 |
| So the general trend, of course, is globally the slowdown of the aspirational customer that we saw in 2023 |
| This compares to a negative €27.1 million operating cash flow in the preceding year quarter |
| The significance of aspirational customers, now for a science coming back is really that the pressure on the overall market, the pressure for some other players that are so dependent on that may reduce and then the motion intensity reduces |
| These were the two categories that suffered more from the decline or from the slowdown |
| According to the latest Bain-Altagamma research study, the global luxury fashion market grew by 4% in 2023, with the online share dropping to 20% from 21% in 2022 |
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