MYT Netherlands Parent B. V. (NYSE: MYTE) First Quarter 2023 Results Conference Call November 8, 2022 8:00 AMm. ET
Participating companies
Martin Beer – Chief Financial Officer
Michael Kliger-CEO
Conference Call Participants
Oliver Chen – Cowen
Matthew Boss – JPMorgan
Michael Binetti – Credit Suisse
Kunal Madhukar – UBS
Flavio Cereda-Parini – Jefferies
Lauren Schenk – Morgan Stanley
Abhinav Sinha – Société Générale
Operator
Ladies and gentlemen, greetings and welcome to Mytheresa’s first quarter 2023 earnings convention call [operator instructions]. Today’s call is recorded and we have allocated 1 hour for prepared comments and questions and answers.
Now I must introduce you to your host, Martin Beer, Mytheresa, CFO. Thank you, and for you, sir.
Martin Beer
Thank you, operator, and welcome everyone to Mytheresa’s investor conference call for the first quarter of fiscal 2023. Before we begin, I would like to remind you that our discussions today will come with forward-looking statements. All comments we make about expectations are forward-looking statements and relate to hazards and uncertainties, in addition to the hazards and uncertainties described in our annual report. Many points can cause the actual effects to differ materially. We assume no legal responsibility to update any forward-looking statements. In addition, we will refer to certain monetary measures not presented in accordance with IFRS in this call. Reconciliations of those non-IFRS monetary measures can be discovered in our earnings press release, which is available on our online Investor Relations page at the addresses of the inversionistas. mytheresa. com.
Now I will pass the call to Michael.
Michel Kliger
Thanks, Martin. Also from me, a very warm welcome to all of you, and thank you for joining our call today. Today we will comment on the effects and functionality of the first quarter of fiscal year 2023. We are incredibly satisfied with our effects. Our company has shown the right strength and resilience in persistently difficult economic and geopolitical situations. Mytheresa accelerated its earnings expansion in the first quarter of fiscal 2023, which is a continuation of what we have seen in previous quarters. In addition, we delivered in the first quarter once before a very smart profitability. Given what we are seeing in the broader client industry and with other virtual businesses, Mytheresa is indeed a differentiated company with an exclusive focus on visitors, a highly adaptable business model, and exceptional operational excellence. These qualities give us confidence in achieving the objectives communicated for the entire year 2023 despite the highly demanding situations of the macroeconomic environment. Today I will detail those 3 must-have qualities that were on display during the first quarter of fiscal year 2023, so you can fully appreciate the strength and fitness of Mytheresa’s business.
First, our unique focus on the high-end luxury sector, whether in terms of consumers and logos, makes us a luxury company and not just a virtual company. Our first quarter events, exclusive logos and visitor KPIs will tell. Luxury explains why we are, in many ways, insulated from the demanding situations and uncertainties of the macro environment. Evidenced by a very strong and sustainable expansion in the first quarter, unlike the more mid-market oriented virtual companies. Second, we have created a very diversified and agile business model. We are global. We focus on resale and have a higher percentage of collection variability. Therefore, we are able to build our business through many expansion vectors while delivering exceptional profitability, positive cash flow and maximum return on invested capital. Third, Mytheresa’s key good fortune has been operational excellence in the business. This can be seen in our remarkable post operational KPIs in the first quarter, top satisfaction from our consumers, and the many accepting relationships we have with our luxury logo partners.
Let me now discuss in more detail those 3 key qualities of the Mytheresa business. Let’s take a first look at the very strong and sustainable expansion in the first quarter. We increased our gross product GMV by more than 20. 8% from the first quarter of fiscal 2022. This is a significant acceleration from the third quarter expansion rate of 13. 2% and the fourth quarter expansion rate of 18 . 2% in fiscal 2022. This accelerated expansion in the first quarter obviously sets us apart from other virtual corporations in the same period. It is driven through the sole focus on high-end authentic luxury consumers and not peripheral and casual luxury buyers. The latter are and will be hit hard by the economic downturn, while the true luxury visitor is more resilient. In the first quarter of fiscal year 2023, our primary visitor base increased more than 22. 7% compared to the first quarter of fiscal year 2022. Average spend of all consumers increased more than 6. 5% in the first quarter of fiscal year 2023 compared to the first quarter of fiscal year. the year 2022. In this regard, the weaker expansion of over 12. 5% for the overall visitor base for the quarter does not matter as much, as it was driven by slower expansion in luxury casual shoppers. To engage with and serve our high-end clientele or, as we call them, luxury wardrobe builders, we have partnered with many of the most no-nonsense luxury brands for exclusive collaborations. We produced impactful virtual content and campaigns that created visibility for brands to succeed with our unique, high-value, multi-brand visitor base, which cannot seamlessly succeed through natural, single-brand offerings.
Our transparent approach to high-end visitor interaction is ultimately the main explanation why luxury logos are always associated with us. Examples of exclusive collaborations with the Q1 logo come with the launch of exclusive Gucci island bags exclusive to winter looks from Love and Moncler, as well as the highly anticipated new collection from creative director, Mature Blay, of Potiga Veneta, which brings to Mytheresa consumers an exclusive first access. We were also the exclusive launch partner for the Love Trotter bags for ETRO, which were featured in the first runway show of Marco Devisenso’s new design and were exclusively showcased at Mytheresa on runway day. Check out our investor presentation for more highlights on logo collaborations in the first quarter of fiscal year 2023. Our unique ability to excite and engage through such unique logo collaborations with authentic consumers of high-end luxury diversity and then building lasting relationships provides us with a very sustainable and developing profit base. This is in addition, of course, to the continued shift of luxury consumers towards online shopping. Pain and Alta-gamma expect that by 2025, only 30% of private spending on luxury goods will be online.
Next, let’s take a look at Mytheresa’s highly diversified and agile business model. During the first quarter of fiscal year 2023, we made progress in all categories such as womenswear, menswear and children’s clothing, as well as our newly introduced life category comprising home and taste of life. Also in terms of geographic presence, we continue to see expansion in all regions. In the United States, which is one of our key expansion markets, we achieved above-average GMV expansion of more than 28. 5% since the first quarter of fiscal 2022. We have fueled this expansion with a strong lineup of events for visitors and logos throughout the United States. Check out our Investor Presentation for more information on the events for the first quarter of fiscal year 2023. We also partnered with womenswear newspaper New York Fashion Week for physical and virtual marketing activities and hosted a high-impact luncheon for nine Gabriella Hearst at 11 Madison Park restaurant. Additionally, in July, we announced that Steven Xu, our new president for China and Asia-Pacific, made a transparent commitment to invest in this region. We expanded our team of non-government buyers and marketing staff for China in the first quarter. Despite the existing demanding covid-related situations for visitors, our GMV in mainland China increased by more than 22. 5% in the first quarter of 2023 compared to the first quarter of fiscal year 2022. In two days, we will launch the Mytheresa author program to help and create visibility for Chinese luxury designers, as well as to develop our public profile in China. See our investor presentation for more highlights on this vital and high-profile program.
In terms of business model, diversity, we have not only increased our category of life based on a drop shipping model, but we also continue to expand our Qurate platform model, CPM, to seven brands in the first quarter. from fiscal year 2023. As a reminder, EIC allows us to retain and serve our consumers as we do under the wholesale model, while ownership of the shares remains with the brand, allowing for greater control and stock control for them. As in previous quarters, we achieved our expansion in GMV by focusing on promoting at full price. The average price of our LTM orders increased more than 5. 4% in the first quarter of fiscal year 2023 compared to fiscal year 2022. Buyback rates for new visitor cohorts purchased in the fourth quarter of fiscal year 22 showed a positive trend compared to the fourth quarter FY21 cohort in the respective first quarter. See our investor presentation for more information on cohort redemption rates. Our visitor acquisition prices increased only moderately to 6% in the first quarter. And finally, we achieved our expansion with a very healthy gross margin, 90 more core issues in the first quarter of fiscal 2023 compared to fiscal 2022. All of those KPIs demonstrate the agility of our business model. Martin will explain in a few minutes how all of this translated into strong negative effects for the first quarter of fiscal 2023.
Third, let’s take a look at Mytheresa’s strengths, consistent with national excellence in the business. A key indicator of this is visitor satisfaction, which reached an exceptional point measured internally with a Net Promoter Score of 81. 0% in the first quarter of fiscal year 2023. This can only be achieved with the highest consistency and quality in all purposes and in components, storage space consistent with services, visitor service and generation services. Additionally, maximum satisfaction for our most productive consumers is achieved through flawless execution of real cash that can buy them consistent income. Examples of those in the first quarter come with the birthday component of the Victoria Beckham show in Monaco accompanied by a dinner for our most productive consumers with shoe designer Christopher Kane himself. And we can notice the most productive consumers of Solomeo, Borneo Cucinelli’s space, especially being part of his private birthday component. Finally, consistency with national excellence today also means continued progress with respect to sustainability requirements. Mytheresa recently published its first positive replacement report. Some of the achievements highlighted in this report for fiscal year 2022 include a 34% reduction in CO2 emissions consistent with the order shipped, achieving carbon neutrality for the business, 90% use of renewable electrical energy in the company , 57% of women in checkpoints, etc. more than 2 million euros of products sold through our consumers thanks to our association with VitaColegtive. See our investor presentation for more highlights on Mytheresa’s positive change report. With all of the above, it’s no wonder we’re firmly on our informed guidance for the full year of 2023. We’re incredibly pleased with our functionality in Q1. Our effects demonstrate the basic strength and consistency of our business model, driving successful growth. We see ourselves as one of the few winners in the obviously established luxury e-commerce space.
And now I’ll give Martin the floor to talk in detail about the monetary effects.
Martin Beer
Thank you, Michel. Je will now review the monetary effects for the first quarter of fiscal 2023 ended September 30, 2022, and provide more main points on some of the points discussed in the past that influence our functionality. Unless in a different way, all the figures refer to Europe. As Michael pointed out, we are incredibly pleased with our effects. GMV in the first quarter from July to September was 197. 9 million euros, an accumulation of 20. 8% compared to 163. 9 million euros in the quarter of the previous year. We were able to boost the expansion of calendar year 2022 despite negative customer sentiment as a result of the outbreak of war in Ukraine and in March. This is quite a remarkable and rugged functionality, highlighting Mytheresa’s exclusive positioning in online luxury. GMV is one of our main price drivers, as it shows the intensity and expansion of our relationships with our customers. The cohort of existing customers and physically powerful expansion in the number of new customers.
Customer engagement and retention continue to grow as our active customers who shopped with us in the last 12 months increased 13. 4% to 800,000. In the first quarter, net sales increased $18. 1 million or 11. 4% year-on-year to 175. 9 million euros. As in previous quarters, reported net sales are affected by the transition of logos to our selected platform style. In the first quarter of FY23, we now have 7 logos operating under the organized platform style, compared to 1 logo in the first quarter of FY22. In the current quarter of FY22, we operate 6 brands under the CPM . Therefore, we expect net sales expansion rates to be much closer to GMV in the current part of FY23 and more similar in FY24 and beyond, as only a few more logos will be registered in CPM over time. As discussed above, due to the unique effect of transitioning select logos from wholesale style to our curated platform style, the net sales backlog is less than our GMV expansion in the quarter. The difference in the rate of expansion between GMV and net sales is purely a one-off monetary accounting effect. For CPM logos we count platform fees as net sales, 12 months after those logos fully transition this one-time effect will be over and net sales will accrue back in line with GMV. The curator platform style brings currency features unique to Mytheresa. This allows for more powerful cash expansion by replenishing stocks during the season and generates a similar earnings profile overall for Mytheresa. Also, the perils of stock position the logo in that it maintains ownership of the stock and Mytheresa has a much longer kit cycle as we only pay for the logo once the visitor has paid us.
In the first quarter of this fiscal year, we saw significant expansion in many parts of the world. We have had continued strong expansion in the United States and other parts of the world through strengthening our position as the world leader in curated online luxury experiences. Our consistent percentage of net sales outside of Europe increased from 40% in the first quarter of fiscal ’22 to 45% in the first quarter of fiscal ’23. Our total orders shipped in the last 12 months increased by 16. 4% to €1. 84 million. Our LTM AOV increased by 5. 4% to €631, one of the best in the industry. In absolute numbers, this AOE expansion is equivalent to an accumulation of 32 euros depending on the order sent. Gross profit margin of 49. 9% advanced 90 basis points from the prior year consistent with 49. 0%, driven by an accrual in CPM consistent with percentage. The high point of our gross profit margin reflects our successful full price positioning, fully consistent with the consistent conception of Mytheresa’s own premium logo. Shipping and payment costs rose to €4. 1 million in the second quarter due to the number of new consumers acquired and a growing percentage of public relations and visitor events executed. And some other proper consumer cohort functionality and a marketing index that stayed in line with our expectations.
SG Expenditure
Let’s go to the account statement. For the 3 months ended September 30, 2022, operating activities generated negative seasonal operating money of €18 million at the same point as the prior year quarter, with positive money for the FY22 total. Construction of our new warehouse in Lógica, which will allow us to provide a better service to our consumers to ship tons faster, adding the portion of last year, 17 million or 40% to 50% of the total charge assumed for the new warehouse between €35 million and € 40 million have already been paid. Most of the remainder will be paid in the existing tax year and the remainder the next year at annuitization. As we indicated in our last presentation to investors, we apply a very efficient and low capital model. In fiscal 2022, we had a positive operating and loose moneyArray and are on track to increase our adjusted return on contracted capital to 28%. We ended the quarter in a strong monetary position with cash and money equivalents of €87. 9 million, no bank debt and €60 million of unused availability under revolving credit facilities as of September 30, 2022.
Turning now to our expectations for the existing fiscal year ending June 30, 2023. Most of the unprecedented global market strings of recent quarters are still intact. Fears of an upcoming recession, a war in central Europe, emerging energy prices, ongoing COVID restrictions in Asia, and prevailing inflationary pressures would also possibly affect wealthy online luxury sales, but to a much lesser extent. measure. Even in those times, Mytheresa has shown a strong top line and very strong back line functionality as we have managed to reach committed luxury buyers. We plan to manage those charge pressures throughout FY23. As I have said before, despite the prevailing macroeconomic uncertainties, we will continue to invest in the quality of our staff and will not compromise on the excellence of our service. This will be essential to help our expansion strategy in the medium and long term, capturing market place percentage and, therefore, strengthening our market place leadership position. We cautiously verify our forecasts because the scenario is less predictable. Therefore, our FY23 guidance remains. GMV in diversity of €865 million to €910 million, an accumulation of 16% to 22% for sales of €755 million to €800 million, an accumulation of 10% to 16%. Gross margin from 410 to 435 million euros, evolving in line with GMV, which also represents an expansion of 16% to 22% and an adjusted EBITDA between 68 and 76 million euros and an adjusted EBITDA margin of between 9% and 9. 5%. We are incredibly pleased with our seamless functionality and acceleration in the first quarter of fiscal 2023. The coming months will bring more transparency on how the world is handling through the existing macroeconomic scenario and related pricing pressures.
I will now turn to Michael for his closing remarks.
Michel Kliger
Thank you, Martine. We are incredibly pleased with the effects of the first quarter of fiscal 2023. We see ourselves very well placed to achieve our short-term goals despite the challenging environment and, on that basis, we take credit for the ongoing process. transition to online and luxury spending. Further consolidation of virtual platforms and opportunities to expand global market share. Mytheresa provides high-value consumers with the most productive multi-brand virtual grocery shopping experience.
And with that, I would like to ask the operator to open us to their questions.
Q&A session
Operator
[Operator Instructions] Our first comes from the lineage of Oliver Chen de Cowen.
Olivier Chen
As for your GMV advice for the future, it would be wonderful if we could get some colour on regional trends in Europe, North America and Asia. Do you have a very smart push, but there are a lot of caveats in the market you called?And time for supplementary question. As we design stock expansion rather than sales, how new is your stock?What about any changes we are aware of? And also, what do you think of the promotional environment?We are beginning to see an intensification and more luxury available in the United States.
Michel Kliger
Let me answer the geographic question, and then Martin, can you communicate about inventory? We have experienced ongoing demanding situations in Asia, specifically in China. We believe this will continue, for sure, until the beginning of next year. There would possibly be a possible upside as the gold stage becomes more controlled. Otherwise, we will face the same scenario that we have faced since January. So that would possibly be an advantage, but if everything is as it is now, we will continue to see the smart expansion that we have been able to achieve. In Europe, we believe that for our visitor segment, the possible recession that will occur early next year is not of great importance. We believe that what exists in terms of demanding situations, the inflation of the value of power is already evident in its habit at the moment. So we expect Europe to be a very strong position for us. And the US has shown continued superior functionality, not as superior as it possibly would have been last fall, but we think it will bring the most productive functionality we’ve seen in the US so far. ‘see you next year, and we really think about trade, especially as a If you look at our numbers, don’t forget that the third quarter of last fiscal year was hit hard. So there’s the opportunity in the third quarter to do some smart numbers in the not-so-smart third quarter. But otherwise, based on what we’re seeing right now, we don’t think there will be significant changes and trends across geography, Martin in inventory.
Martin Beer
Yes, happy to communicate about stock. Here too, we are happy and happy with the stock levels. They are precisely within the budget if we take a look at the deliveries of the other seasons. And we expect the GMV in stock to be precisely around last year’s level. So on this front, we are fully delivered as planned and have the freshness to meet the needs of visitors.
Operator
Our next one comes from JPMorgan’s Matthew Boss line.
Matthew Patron
So, Michael, thinking about visitor expansion, the largest visitor expansion, up 23% in the first quarter, is the most sensible of the expansion of more than 40% a year ago. What do you do with those large cohorts of visitors? And then, how do you balance gross margin while getting new visitors?
Michel Kliger
So I say, if you see smart expansion in most sensitive consumers now, the origin is a year ago because you want to get the right one and then grow it. And now we have noticed for almost a year, still a very strong trend in the expansion of the most sensitive consumers. We think it will continue because there are definitely tough economic times, the more the peripheral shopper, the more the occasional shopper may put off purchases, yet the core luxury shopper continues to spend. And as those cohorts age and mature, that’s a more wonderful word. We continue to see this development. So the original acquisition is actually through immensely subtle targeting, actually bidding on the right traffic, actually bidding on the right ad where it’s really about putting virtual marketing in place. Client education is, of course, heavily concentrated on non-public one-on-one relationships with non-public buyers. Money can buy reports that we have continually featured in these calls, which are in fact exclusive because they allow our most productive buyers to meet the designers to be part of the fashion environment they love so much. And the good news is, of course, that as long as we provide operational excellence, they have great loyalty among more sensible consumers. Therefore, they do not require endless marketing and endless discounts. They ask for exceptional service. They require exceptional durability and unique gases, but the more you focus on this customer, it’s a key strategy to protect your margin.
Matthew Patron
And then maybe, Martin, just to be awake. So with respect to the expansion of gross profit in dollars of almost 14% in the first quarter, how certain is the expansion of 16% to 22% for the full year?And what’s your best opinion on gross margin velocity for the rest of the year?The year?
Martin Beer
That is, a gross profit of more than 14%, precisely as you said. This is faster than the 11. 4% net sales expansion, but slightly slower than GMV’s expansion, also driven by the CPM percentage in the last quarter of the year, which we just had in the CPM logo and which now has 7, and then has compensatory effects on P.
Operator
The following comes from the lineage of Michael Binetti of Credit Suisse.
Michel Binetti
Thanks for all the details. Congratulations on a wonderful term. Could you elaborate a bit more on gross margin, maybe how much I know you don’t want to get too close to the influence of CPM? But how much of the upgrade in gross margin in the quarter was due to product mix, especially when you go into some of those new categories, what’s the effect of discounting one year on the ‘other, maybe also foreign currencies? , I would be curious. About shipping, how much is the shipping overage compared to 2019? And when do you think you can start to get back below the 12% point that we’ve noted before? And then I found out the marketing comment from him was interesting, he said CAC up 6%, but marketing leverage. Therefore, their number of first-time homebuyers was about 15,000 fewer than last quarter. So perhaps more of the expansion will come from existing consumers, and you haven’t had to hype it as much. Can you tell us if this is continuing or if you want to focus more on getting consumers year round to help us with the marketing line?
Michel Kliger
Michael, maybe start with the last one and then Martin will focus on gross margin. Completely correct kind observation. What we think is going down right now, as I said again, as I mentioned before, is the edge visitor, the point visitor is not as widely available in the market as it was 12 months ago. So seeing fewer new consumers doesn’t mean we’re getting fewer smart consumers. As you know, we have a fairly large percentage of first to second year consumers, which is a herbal turnover of consumers who only buy luxury pieces once or twice a year and don’t come back. And so we continue to focus as much as possible in our marketing efforts on literally attracting the right consumers who mature over 12 months and become the most productive consumers. So if the total number of first-time buyers is going down, what’s actually going down is less peripheral, fewer occasional buyers, and all is well. The average package then goes up, but it really has even higher quality in the combine. All this is constantly monitored. At all times we provide you with 90 and 30 day redemption rates. As long as those numbers are the right kind, the strategy really works. And as I mentioned earlier in the source of the income statement, having less overall visitor expansion is absolutely appropriate right now, as long as we get our percentage of more sensible consumers and progression of more sensible visitors unfolds. as it happens, and that we get more than there is to provide. But with a 21% expansion in this environment, we are more than happy to have this slightly different combine at least for now. Martin, at GM?
Martin Beer
Regarding the gross profit margin, as you say, the gross profit margin for the full year will accumulate as expected. And I think as we’ve talked about and guided before, it’s going to be around 54% for the full year, driven by a steadily expanding CPM rate. And this is also the main explanation why the previous year’s quarter had another GMV opposite gross profit margin than the current quarter. And that’s why the gross margin expansion, the absolute gross margin expansion is 14%, which is more powerful than the net sales expansion, but less than the GMV expansion of 21%. profit margin, since it is also decided through seasonality. So, the first quarter and the moment of this fiscal year and the first quarter and the moment of the last fiscal year, there is a replacement of days and sales consistent with the day. And so, the quarterly look is not so successful. The general logic is that we have shown our forecasts and we are very confident of the whole year with a gross margin evolving from 16% to 22% in line with the GMV.
Operator
[Operator Instructions] The following comes from the lineage of Kunal Madhukar of UBS.
Kunal Madhukar
A few, if I could. I would like to begin to return to the last question. In terms of gross margin expansion of 14% versus a target of 16% north of 20% for the full year. Martin, given the figures in his quarterly report, surely we want to take a look at this quarter’s trends that were particularly lower than the leverage of recent quarters. So can you see us exactly what’s going on with gross margin?So I have some follow-ups.
Martin Beer
I mean gross margin, that’s where we intentionally don’t give quarterly gross margin indications because it’s influenced by a lot of things. And one thing is the previous CPM share, which decreases a lot with a unique logo. We now have seven logos. And as we said before, the gross margin of a CPM logo with respect to GMV is a little lower than the gross margin of a wholesale product or also of a logo with respect to GMV. And that’s why it’s compensated through others. I mean profitability and marketing, SG
Kunal Madhukar
And then some quick follow-ups. One is on the modelling side. They reported a 28. 5% expansion in GMV in the United States. How much was that in foreign currency? And then, in general, at GMV, what was the effect of FX?And then, what we’re getting out is the FX effect, how much of the expansion at GMV essentially came from the value increases that luxury brands have in some way?implemented during the last year.
Martin Beer
Yes, I will take the topic of FX and then Mike, we can also communicate about AIV or value increases. The overall currency effect on our business style is very low as we have a foreign exchange exposure after our herbal coverage of around 22%. And that’s why in this quarter, and we also communicated it in the last quarter, this quarter, the exchange rate effect is around 3%. As far as the United States is concerned, this would obviously be a much higher figure, since the strengthening of the US dollar already occurred in the first quarter.
Michel Kliger
Yes, on the value factor, that’s true. Luxury brands have increased in value, especially in MAG, but the accumulated value is a bit complicated to evaluate because 80% of what we sell has no equivalent to the previous season. So only in the bags, the shoes there is the Mace style that has existed for several seasons. But when you look at the total number, a 20. 8% expansion in GMV, at the same time, the AOV increases to 5%. Therefore, there is something worth keeping in mind here, yet to achieve 20. 8%. We have sold more items, serving more consumers and an AOV expansion of 5%. It’s worth building ups there. Some consumers buy more expensive portions, even if you can’t compare, however, they can buy it. Now shoes with performances, which are more expensive and flat. so I wouldn’t really say it’s inflation that you see here at 20. 8% or inflation what you see with a 5% AUV is that consumers are actually willing to spend money.
Kunal Madhukar
Just a quick follow-up then. As for the number of orders, LTM orders consistent with the average consistent with the visitor, which advanced slightly from 2019 levels. Now, when we think about your visitor base, one of the questions we continually ask ourselves is what proportion of that visitor base is the wealthy user who buys and builds the most wardrobes. What proportion of your customers are similar to high-net-worth people?And then, in terms of average, in terms of frequency, what is the consistent percentage of your visitor base over the last 12 months are other people who bought once and didn’t come back for a new order.
Michel Kliger
In the last question, we didn’t divulge that detail, but we did reveal in our F1 a style that was pretty stable, that from year one to year two we actually moved around 75% of the consumers. We keep 50% of the billing. And then from the time of year we actually retain 90%, 95% of consumers and 95% to one hundred percent of revenue. So there’s a giant number of one-time users, who naturally don’t come back because sometimes they don’t come back. Looking at the number of our clients who are high net worth Americans. So I think there is a big part. I mean we don’t capture each and every portfolio of what they spend. But it is certain that the 3% of consumers who today constitute more than 0. 33 of our income source are all rich Americans. And the most productive evidence of this is that it is a virtual company that has just generated 21% growth in GMV. It’s from a company that caters to high-net-worth Americans who continue to spend even though, of course, for many segments of visitors, economic situations are very difficult and at least very insecure. And so our clientele is literally skewed toward those who, at the moment, feel no reason to cut back.
Operator
Our next comes from the lineage of Flavio Cereda-Parini of Jefferies.
Flavio Cereda-Parini
So, two, maybe 3 small questions from me. In terms of geographical mixing, there has been an attractive replacement and I know it is only a quarter, yet you say compare Germany to the rest of the world. I wonder if you could just give us a little more detail about what happened there, one in the back and one at the top. Second, can you give us or remind us what the projected repayment expense is for IPO shares for the year?And finally, I wonder, about In recent weeks, have you noticed any specific dynamics in terms of pullback rates, are they aligned with the metrics of good fortune?Or have you noticed a significant replacement in a specific chart?
Michel Kliger
Let me answer questions one and three, and then Martin can communicate about fair compensation. At number three, in the last few weeks we have noticed a slight increase in the return rate, nothing out of the ordinary in terms of fluctuations. So, we still have for the full year to have a strong recovery rate, but as our paper shows, the recovery rate peaked at 3 percentage points selling. So to your query about this part. Geographically, we continue to do very well outside of Europe. Within Europe, it is obvious that there is perhaps a bit more conservative sentiment in the DACH. But also don’t forget that in the DACH region, we probably have an even higher percentage of, I mean, not just high net worth individuals, because that’s our innermost penetration into the visitor segments. So we think outside of Europe, outside of Germany, that over the next two quarters, given the economic environment, expansion is going to be strong there, and that’s where we’re making an investment with staff and marketing activations. What about stocks, Martin?
Martin Beer
To be fair, this year we expect a stock-based rebate of approximately $30 million next year, 2015 and the following year, €5 million. So, this is coming to an end and everything comes out of the initial public offering with a percentage worth $31. It’s IFRS accounting for that. So, it’s solid because we’re accounting for this based on a $31 percent leading to $30 million this year, next year.
Operator
Our next comes from the lineage of Lauren Cassel Schenk of Morgan Stanley.
Lauren Schenk
Maybe if I can approach the gross margin query in a slightly different way. So, I guess in the last two quarters, you’ve cited taking advantage of around 290 basic gross margin issues from the CPM model. If we assume this is more or less consistent over this quarter, it would mean that underlying gross margin has declined through nearly two hundred basic issues. Is this the correct conclusion? And if so, what is causing this decline?
Martin Beer
I mean that the difference in the effect of the CPM percentage in the fourth quarter clearly cannot be compared with the evolution of gross margin in the first quarter because in the fourth quarter of the last year of last year we did not have CPM. So, a natural CPM percentage effect of 290 basis points. In the first quarter, we already had a big logo, a key logo in the CPM model. Therefore, the cumulative effect of the CPM percentage is much smaller. It’s more than a part of it. And the reduction in gross margin on wholesale products is offset by the effects seen, for example, in marketing and SG.
Operator
Our next one comes from the lineage of Abhinav Sinha de Société Générale.
Abhinav Sinha
I was wondering if you could give us your feedback on the existing transactions you’re seeing given that we’re already halfway through the quarter. And the timing is in terms of, if me, I just need to check in terms of FX impact. Basically, what you’re saying is that the impact of the currency, GMV’s expansion would have been 18%. Is this the right way to look at things?
Martin Beer
Yes, precisely. So I refer to the FX effect, if I had wanted the expansion of the currency to be precisely lower. That’s the big impact. And in existing trade, and that’s also an explanation for why we’re confident in our year-round direction because since October, in October, also today, we’re seeing a continuation of the trends we talked about in the first quarter. .
Michel Kliger
Yes, I mean existing trade, let me summarize. I mean we looked at this training from 16% to 22%. I don’t forget that when we last published this advice, there was a bit of skepticism about this existing feasible environment. It means that we have correctly pointed out that we are seeing non-stop acceleration. There has been some debate about whether the last quarter has accelerated. Obviously we said yes, we had to ’18. We already fulfilled the first quarter with an expansion of GMV of 21% or 20. 8% that we feel very comfortable with the forecasts of 16% to 22%, which I have to hope that, of course, it will be well above many, many other virtual platforms in terms of what they advise in terms of expansion, which boils down to focusing on the visitor. But we feel with the first trimester and with what we see right now, very confident in our directions.
Abhinav Sinha
And just a follow-up. So, like last year, this year too, you expect to have a positive loose cash flow, right?
Michel Kliger
Yes, that is our expectation.
Operator
Thank you, gentlemen, we have come to the end of the question and answer session. Thank you for your participation in today’s call. You can now disconnect your lines.