Ladies and gentlemen, welcome to the Mister Spex Q2 2023 Results Presentation. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Irina Zhurba, who will lead you through this conference? Please go ahead. Thank you, Sam. Good morning, everyone, and welcome to our Q2 2023 results call. The presentation, as usual, will last around 30 minutes, then we'll allow another 10-15 minutes for the Q&A. As usual, you can find the presentation online on the Investor Relations website, under Reports and Presentations. The speakers today with me are Dirk Graber, Founder and Co-CEO, and Mirko Caspar, the Co-CEO of Mister Spex. That said, let me hand over to Dirk to begin today's call. Thank you. Yeah. Hello from my side as well. Thank you for participating, and yeah, just let's quickly jump to the executive summary of today and our agenda. So, Q2, we continued to outperform the market and showed a very solid trading result. Consumer sentiment slightly improved in Q2 versus the last two quarters, and we continued also to execute on our Lean 4 Leverage program. And we will give you further insights in the next couple of minutes. We also made good further progress in fulfilling our brand promise, which is to deliver the perfect frame for every face and perfect lens for every eye. Mirko is gonna elaborate that, on that, how we progressed over the last months, on this topic as well. And then I will lead you through the financials, in the second part of the presentation, going into our, good revenue development of +10%, in Q2, total of 8% in H1, and, the return to EBITDA profitability, for the first half year, which is an improvement of EUR 4.7 million, versus the first half of last year. And, this is also supported by a very strong, improvement of our operational cash flow. So by having said that, I'm handing over to Mirko for the strategic update, on Mister Spex. Thanks, Dirk. Good morning, everyone. Dirk said it before, where are we? We are seizing opportunities. We are increasing our market share while we are improving profitability. And on the other hand, we continue to develop our brand strength through delivering on our promise of the perfect match for every face with ease, style, and expertise. So let me give you the overview. On the left-hand side, you do see the consumer sentiment development, and while we do see an improvement in sentiment, quarter-over-quarter, the absolute level is, of course, still very low. Regardless, we are, and you see that on the right-hand side, we are outperforming the market and taking market share, and we continue to do so in the months where the market is growing, and we do so in the months like three, four, five, six, where the market has been slightly shrinking. Now, the market here is PG & SG in Germany as a reference measured by the GfK. So a significant driver of the market share gain has been our store performance. So let's look at that in detail. We have seen on the left-hand side a significant improvement of the average sales per store. And, and on that, you see on the right-hand side, a step out of profitability, and we are returning to solid EBITDA per store on average. Now, the EBITDA on the right-hand side that you see is the full wall EBITDA. It includes rent, but it does not, but it excludes the central overhead costs. Yeah, but, but, but you see, starting from March, we've been consistently gone back to strong EBITDA on average per store. And if you remember, the drivers that we introduced in our Lean 4 Leverage program for the stores were mainly the price optimization, which holds true for all channels, so online and offline. The second bigger measure was that we started selective campaigns to create local demand in areas where we still see low traffic numbers, but still reducing discounts, but being very targeted and selective in those campaigns. And on the bottom line or on the lower part of the P&L, really a tighter grip on costs and a higher flexibility of the workforce. So, we did actually reduce the average staff per store and but the significant increase in flexibility, so we could put the workforce where we actually need it. Those improvements that I mentioned with regards to the stores, as you recall, they are under the joint umbrella of our Lean 4 Leverage program, and the first pillar is the concentration on the core. That is, A, we focus significantly on the DACH region of our business, and B, we to focus on the existing stores. The like-for-like growth have been 6%, and I already touched on the improvements of the profitability of our stores and the store network. The second pillar is basically to earn more money with every product sold. And you see, again, also in the second quarter, a strong improvement in gross margin, and we'll double-click and zoom in on that in a second. But I already highlight one driver of that, and that's the introduction of the price for the formerly free lens of EUR 1.5 single vision.... And on the third pillar, the lean efforts to increase our operational leverage. The first thing is we're rolling out the lean philosophy in a large-scale training program. Over 20% of employees have been trained by now, and they're using process analysis, value chain analysis, team boards, shop floor boards, et cetera, to continuously improve the efficiency of what they're doing. On the other hand, we closely looked again at our headquarters functions and actively made FTE adjustments to support our continuous focus on profitability and cash. Let's double-click on the optimization for the margins. What you see is 189 BPS improvement quarter year-over-year for the second quarter, so still, and again, a significant improvement in margin. And mind you, while we are growing and taking market share, and that, and the first driver that I already mentioned, in the middle of April, we introduced the price of EUR 19.95 to the 1.5 lens, which was formerly free, which added significantly to the basis point improvement of the margin. The second is we continue to reduce discount rates. You see that in the middle of this slide. Also a significant driver in Q2 was the margin-accretive product mix. You see that we were growing significantly in sun at the expense of contact lens, which is the lowest margin category, and that was deliberate. Before I hand over to Dirk, I want to highlight a few initiatives that continue to build our brand strengths. Why is that so important? We have again reduced the share of marketing spend while increasing the margin and taking market share, and that's quite tricky in that magic marketing triangle. And one thing that supports that is the power of our brand, which allows us to outperform in all three of those categories. And what we do to improve our brand positioning and work continuously on our brand strengths? Well, the first one is the perfect frame for every face with ease. We rolled out our bespoke frames technology and the collection for the perfect fit and comfort. It's based on our own face-capturing technology and fit algorithm. We've rolled it out to 23 stores, and we continue to do so. Also, the same fit algorithm is in our app. We launched it in the iOS store for new customers, so they can measure their face, and we can recommend the fitting frame from our large assortment. And that increases the conversion rate of new customers and reduces the return rate for those new customers. If we look at the style, we added six new brands to already outstanding assortment, among them Maui Jim, an eyewear icon from Hawaii, with incredible lens technology. In addition, we launched seven private label collabs, and just one highlight, Mrs. Bella from Mister Spex. That collection sold out in 1.5 hours. What you also see, we continue to deliver on expertise, and that was one of the biggest focuses of our 15-year anniversary campaign. What we did, we featured our own employees and highlighted the 15 years of optical expertise that we were delivering. So as you see, we continue to deliver every quarter in our brand promise, and that's why we are so confident about our strategy. Now over to Dirk with more numbers. Okay, thank you, Mirko. So let's quickly look at the highlights of the financial update. I mentioned a few of them. We accelerated our growth rating to 2%-10%, bringing H1 to a total of 8%. We are fully on track on our full-year plan on the revenue side. In terms of profitability, we also went back to a profitable adjusted EBITDA in H1 with EUR 0.7 million, which is a significant improvement versus the first half of last year by EUR 4.7 million. Or also here, we are on track. Second quarter, we see a very strong cash flow development of EUR 13 million. I will comment on that in more detail in a few minutes. We ended the quarter with EUR 124 million in cash and cash equivalents, which is a very solid basis for us. Now let's look into the details a little bit more. This year, in Q2, but also in H1, revenue split is slightly different than last year. Why? Because we focused on the higher-margin categories. You see that the growth in prescription glasses accelerated versus last year to 8% in Q2, and for prescription glasses by 22% in Q2. For the first half, prescription is up 13% and sun is up 18%. Please remind always that in our sunglass revenues, also prescription sunglasses, are included. So within the season, we typically see a marginal trade-off between prescription and sunglasses growth, but balancing this out typically on a full-year basis. Contact lenses, we told you already in earlier calls, we took the deliberate decision to really focus on margin-accretive revenues, and so therefore we optimized margin management for contact lenses, which led to slightly reduced revenues, so Q2 -6% and H1 -8%. There's also certain FX impact, which I will explain to you on the next slide, especially for the Nordic countries, included in that -6% or -8% for contact lenses. Overall, we continued to really show strong double-digit or mid-double-digit numbers for our boutique segment and also a healthy growth in our own brands. In total, we added three stores in the second quarter, currently running 74 in total. So now let's look into the segments, Germany and International. Part of our Lean 4 Leverage program is to focus on the core business and really tweak our total business for profitability and getting to a positive cash flow. And so the focus on Germany is part of that. We have a strong brand awareness here, so therefore our and also the investments in our retail store network and so on are quite advanced in that market. So therefore, we showed a very strong 14% growth in Q2. That is included or supported by the 6% like-for-like growth of the retail stores in the second quarter. First half, basically, double-digit like-for-like growth on a retail network. International, we see a slight contraction by - 2%, constant currencies, that what I meant is +2%, so we see some headwinds on Nordic, Nordic currency development in the second quarter. And overall, basically, we see or we continue with our very strict margin management also in general international markets, focusing on bottom line. So now let's look at the financial performance based on where it's coming or, like, where is the improvement of the EBITDA coming from, right? So in the second quarter, we continued to improve our gross margin by roughly 190 basis points. So first half year, it's 290 basis points improvement. The HR costs are basically slightly increasing in percent of sales. Why? Because we significantly added retail personnel for our 14 new stores, but on the other hand, Mirko explained it, we also have been very cost sensitive on overhead, right? Marketing expense in the second quarter contributed by roughly 30 basis points to the EBITDA improvement, and a significant contribution came in the second quarter from the other operating expenses. So EBITDA improved by 270 basis points, and the adjusted EBITDA by 250 for the second quarter. In the first half, it's in a total improvement of 130 basis points, right? On the marketing, just a comment here, we are on a good path to continue our, let's say, optimization levers, but we had also a very successful 15-year anniversary campaign that started in Q2, which focused on optician expertise and helped to drive our sales in the German market as well. So now, if we dive a little bit deeper, what you see is the gross margin improvement, which is the biggest lever on EBITDA improvement in the first half. It's really driven by price adjustments and the reduction and simplification of discounts. We continue that path, and we see that basically we are having a strong brand equity and that our consumers are basically accepting that, and we continue to grow and increase our absolute profit. Personnel expense, I just explained, we streamlined headquarters functions, but on the other hand, have an additional 14 stores. Operational expenses here next to, I would say, the higher AOVs, which drive significant operational improvements. We also see first positive impacts from productivity improvements through the lean management approach that we started to implement in the internal organization, but the first impacts we see in operations. Marketing, I mentioned, continued reduction optimization, which really helps to drive the improvements in the effectiveness of marketing. We also had lower one-off expenses and adjustments, so leading to this 130 basis points in improvements of adjusted EBITDA in the first half of 2023. Now, if we look at cash flow, which showed a very strong development in the first half of 2023, we ended Q1 with EUR 113 million in the bank. Now, we added from operation EUR 18 million. We invested EUR 4 million, which partly is store expenses, the other one is capitalized IT investments, and negative EUR 3 million on the financing, which is mainly the lease payments that we had. So ending the quarter and the half year, EUR 124 million. So next to obviously the good trading results and the EBITDA improvements, the operating cash flow improved significantly through working capital management. There are some seasonal effects on that, because of sunglasses, but overall, we are very satisfied with that development. So let's look at the second half. What do we expect and what you can expect from us? So I think, Mirko mentioned it, consumer sentiment is not easy, right? And it's also, if you look at the latest GfK numbers, all the comments on the German economy, which is our core market, it's not so promising, right? So, we see that, I would say, there are some headwinds on trading, I would say, or potential trading, because of that, consumer sentiment. But overall, we are committed to what we initiated, our Lean 4 Leverage program. So on gross profit, we continue to reduce and simplify discounts, that will also be true in the second half. We continue to grow in the highest margin category, which is prescription glasses. So, and also increase the share of prescription in our total revenue mix. I would say, what are the headwinds on gross profit? It is, over the summer, we've seen significant promotional activities also from competitors. And, while the second quarter showed really good weather patterns, and you've seen our sunglasses growth, for Q2, I would say the weather, at least for our core markets, in Q3, showed mixed results, or patterns impacting also revenue there. Personnel expenses, we continue to streamline our headquarters functions. Mirko mentioned that, so there will be some benefits from that in the second half, but we also continued to add new stores. We're planning to open up to three new stores in the second half, ending the year with eight or nine. Also we see continued labor cost inflation and overall cost inflation in our core business. On the operating side, I mentioned we started to implement the lean management philosophy. First impacts are shown in operations, but also customer service, and we roll that out to headquarters function as well. We continue to focus on our marketing effectiveness. But on the other downside, headwinds would be any kind of operational deleverage in case the market basically sentiment is further deteriorating. All right, so let's look at the guidance that stays unchanged. So we are committed to our mid- to high single-digit revenue growth for 2023 on top line and a low single-digit percentage EBITDA margin or adjusted EBITDA margin for the full- year. Right? Q3, I just mentioned, so we see mixed patterns, especially impacting obviously sunglasses. We see the GfK Consumer Climate lowering in the last month or two. And we also, I would say, see that the world is in flux, so there are a lot of things happening and therefore we, I would say, are stay cautious on the overall management, but are fully committed to the guidance, as I said. So looking ahead, we will present our Q3 numbers on November ninth, and also attend a number of conferences in the second half of the year, followed by a company-sponsored roadshow this afternoon. So having said that, I would like to thank you for your listening and participation, and then we're gonna open Q&A. Thank you. If you do have a question for our speakers, please press star one one on your telephone keypad to enter the Q&A queue. Once your name has been announced, you can ask a question. If you do find that your question has already been answered and it is your turn to speak, you can press star one one again to cancel your question. Please stand by while we compile the Q&A queue. Once again, if you would like to ask a question, please press star one one on your telephone keypad. Our first question comes from the line of Graham Renwick from Berenberg. Your line is open. Please ask your question. Graham, your line is open. Please ask your question. Hello, good morning. Thanks for taking my questions. I have a few. Just firstly, on Q3, you've mentioned a bit of softness. D ue to the weather, are you able to sort of give us a bit of color on what sort of growth you are seeing, so far over the summer? You know, should we still be expecting sales to grow in Q3, but just at a more moderate pace versus what we've seen in Q2? Second question, just on cash. You've obviously had a very strong cash performance in Q2. I know there's a few sort of technical factors within that, but where are you expecting cash to land at the end of the year? What are your expectations for, for cash burn this year? Third, just on the AOV, up 10%, how much did price increases contribute to that solely versus price mix? And on the price mix topic, you know, where is the, the mix of progressive lenses now in the business, and how has that been developing? And then just finally, just your store opening plans for the second half and what your current pipeline is for next year. Thank you. Mm-hmm. Thank you, Graham. So on, I take the first two, and then AOV, I would hand over to Mirko and also for the store expansion. So on growth, so we expect single-digit growth, also in Q3. I would say maybe a little bit more moderate than in Q2, but so far, we are on track for that. On the cash balance, I mentioned, I think we are satisfied with the current progress, but there are also some, I would say, seasonal working capital impacts on that. So we remain with our cash flow guidance for the full- year, which we gave, to end the year with EUR 105 million-EUR 110 million. So that's the current expectation that we have. Over to Mirko on the AOV development. Yeah. We see, due to the fact that we have FX effects negatively affecting the AOV of contact lenses, actually, a lot of the AOV, the average AOV development is price increases for prescription. And that's a healthy, stable development that we can bank on for the second half of the year. The development of multifocal, I think, and the progressive lens share, what you see is that the share improved online roughly 10% and offline, roughly 10%, as an order share. So that shows you that our continued effort on optical expertise is driving those positive share developments, not only through more stores that we open, but in both channels we see an increase in the share of multifocal. That also contributes to the AOV, obviously, but, but again, there you see that, the price increase for single vision and multifocal is, you see... We, well, we drive that in both categories, so the same. Yeah. So, on the scope expansion, in the second half, it will be likely quite backloaded. To the end of the year, we assigned a number of contracts, so we secured the locations already, which I mentioned. For 2024, we currently expect a similar pace as this year, but we haven't finalized the plans for next year yet. So we are always screening the market for attractive opportunities, and we have a running pipeline there, and therefore, we are confident to equalize to a certain number, and to also meet that that will be targeted in 2024. That's very helpful. Thank you. Thank you very much. Our next question comes from the line of Cédric Rossi from Bryan, Garnier. Your line is open. Please ask your question. Yes, good morning, everyone. So I have two questions. The first one is regarding the consumer sentiment, so a follow-up on Graham's question. Do you feel that even if we stay at low levels that the consumer patterns and the traffic is becoming more predictable, also helping you to probably increase your marketing effectiveness? That's my first question. The second one is regarding the boutique format. So it continues to outperform the other price points. I recall that over the past quarters, you were not planning any additional store opening with regard to this format. But, looking at the performance and probably also maybe a discussion that you have with other brands, do you feel that probably you could maybe reconsider this scenario and open a new boutique format in the near future? And my third question is regarding consolidation. So we have been seeing many M&A deals over the past quarters in the eyewear industry. So the market consolidation is probably also helped by a smaller chain and brand being under pressure. Is M&A still on the table with regard to Mister Spex? Thank you. All right. Hello. Hi, Cédric. Yeah, let me take the first two questions. On consumer sentiment, well, I think it is predictable in a sense that it is, that it'll stay relatively low in our core territories for quite a while. However, just to shed a bit of light on it, we saw boutique sales grow roughly mid double- digits, so really strong boutique growth again. That is relatively independent of the average consumer sentiment in the market. We see a strong demand for the fashionable and luxurious eyewear, and so that's relatively predictable. Also, our targeted campaigns for the fashion oriented private label and value buyers also over proportionally is successful. So we see an over proportional growth in those two segments, the targeted fashionable private label and the boutique. And we do feel that with those two targeted, let's say, targeting efforts, we expect a further improvement in marketing spend, or at least keep the spend efficiencies that we've seen in the first half of the year. On the boutique store format, actually, we are really satisfied with the success of the boutique store format, even though it's only one store. What we have done is that we selectively increased the boutique assortment and also tweaked a bit of the boutique environment in the existing stores. So, that is one aspect of the boutique format that we wanted to do. Actually, the rollout of the custom-made frames in all of our stores as the next step is one sign that we back our boutique and premium strategy in all stores. Now, to the question that you really ask is, will there be no more new boutique formats? There is no concrete plan, but I definitely do not rule it out since it is actually quite successful. Over to Dirk, maybe on the consolidation in the industry. Yeah. So, Cédric, I share your view. So we also seen a lot of, I would say, movement in the market. I think our first priority is always to improve our core business and to basically also grow organically. Nevertheless, I mean, yes, there are every once in a while attractive opportunities in the market, which we, if reasonable and if value accretive, we look at, right? And so therefore, we continue to do so. And in case there is an opportunity for us to strengthen our position in another European market, existing or new, we would consider that also in the future. I think the further we progress with Lean 4 Leverage and basically gets to where we aim for on the organic path, the easier it is basically for us, then also think of adding potential, as I said, add-ons, if they're accretive in value. Yeah. Thank you, Dirk and Jessica. Thank you. The next question comes from the line of Alexander Thiel from Jefferies. Your line is open. Please ask your question. Hi, good morning. Most of my questions have already been answered. Just a quick follow-up on the Q3 seasonality. Is it fair to assume that Q3 is still gonna be stronger than Q4 in absolute revenue terms? And then looking at below your EBITDA line, the D&A increased significantly year-over-year. If you could touch on the impairments that, that you saw on that side. And from a margin progression perspective, is it also fair to assume that Q2 is now the peak of the year with the 3.4%, because you're stating higher promotional activity? So how should we basically think about the competitive situation on the market when it comes to pricing for the rest of the year? Thank you. Sure. So maybe I start with the margin improvement. Alex, so what we see is we started to improve our focus on pricing and gross margin in Q3 last year, right? So we do expect also because of product mix with prescription increasing in share again in the second half of the year to see margin improvements on a year-over-year basis. But maybe not basically as high as in the first half, but we do expect basically to improve. There's always an assortment mix effect, as we said, but overall we do expect basically to see further gross margin improvements on a year-over-year basis in Q3. On the D&A, we have... I mean, there's some technical effect, because if your equity value is higher than your market cap, there are some triggering events in IFRS, where you have to have impairment tests, and we've done that basically also again in the H1 report. So, what we see is... And we have to do this on a CGU level, so cash generating unit, which at Mister Spex, is an individual store. And if an individual store is slightly below your expectation, you need then basically to adjust. That means also if market cap would go up and store performance picks up, that effect would reverse. But there is an impairment test... There was an impairment test done for roughly EUR 2.7 million, fully on the retail network, where a low number of stores basically were impacted. And we have then basically to write off the investment into the store and the right of use assets. And that we've done according to the IFRS rules. Maybe just adding quickly, I wasn't 100% sure, Alexander, if you were referring to the absolute strengths of Q3 versus Q4, or the margin or the growth. So just a bit, and on absolute levels, Q3 is stronger than Q4 because we have a significant share of sunglasses still. In terms of growth, it's just we have a normal growth path as we guided the market and, so that is just... But on an absolute level, Q3 is stronger than Q4 due to seasonality. Okay, that's very clear. Maybe a follow-up. On the few month call, there was again a pretty heavy discussion on the employee market situation for opticians. Could you give us some insights into how you're basically progressing with sourcing new opticians and store employees for your new stores that you're planning to roll out of the situation on the employee market, basically? Mm-hmm. So I think we continue with our existing strategy, right? So I think, and that is the following: we need to be an attractive employer brand for opticians to join Spex. And I think, with our approach to leadership, to culture, I think we demonstrate that definitely, to especially younger, dynamic opticians, that we are basically strong. So that's the first one in hiring. Also, when we enter new cities, obviously, we need to hire people, but we also try to transfer, often existing employees to new city stores, because then we have, I would say, a mix of new and existing, Spexies, as we call them, who know the process already and can run the store more efficiently if you, compare to just a new team. Second is, we, also invest in apprenticeship, right? So, this year we hired, more, or we had an intake of more than 40 new, optician, apprentices across our five training centers. Cologne is the latest, training center that we opened. And now we run, as I said, five of them across Germany in different cities. This is always a three-year program where they finish as a certified optician. Additionally, we also updated our program to basically have an education for master opticians, which are required to run a retail store, so at least we have one. Here we have an attractive program for existing opticians that want to become a master optician to work either part-time at Mister Spex and do their education or to take a leave, do this at a block, basically, and then take over also a leadership position within one of our retail stores. So overall, I think we are. I would say we see that in the market, so it's not that we don't see it, but I think we have good programs and measurements in place to not struggle, basically, to continue to grow and to further basically develop and also educate and train our existing retail staff. Okay, that's very clear. Last one from my side would be on your international markets. Mm-hmm. Which country is currently basically ripe from a brand building perspective, that you can go from a pure online site also to an offline store site? Which countries are currently, based on your estimate, your next store openings, basically? Yeah. We do focus on DACH right now with the store expansion. As you know, we already have stores in Sweden on top, but for now, that's our focus within our strategy, you know, within Lean 4 Leverage, it's focused on the core, and that holds true for the omnichannel strategy for now. Okay. Thank you. Thank you. The next question comes from the line of Albrecht. Your line is open. Please ask your question. Yeah, what is your present market share in Germany? I mean, if you only look at revenue, depending on which source you use, the German market is typically estimated to five to six billion euros in sales across all categories, across all channels. So within that market, our market share is roughly, purely on revenue, 3%, right? That, that's a ballpark number. Obviously, within the individual categories, it's very different. And also on units, right? It's a different game. So I think if we look at the numbers, we see that in sunglasses, within optical retail, we're even market leader. In contact lenses, I think the average, the estimates are slightly low double- digits in terms of revenue. If you look at prescription glasses in terms of units, we are at a high single-digit market share. But since we have a lot of single vision share, or higher single vision share, because of the average age of our customers being high thirties, and therefore, the price basically being significantly lower for single vision than for varifocal, the revenue share is lower in prescription, in terms of revenue. Okay, thanks. Thank you. We have no further questions at this time. Okay, thank you so much. I think then we're done for today. Thank you for participating in our call. As usual, if you have any questions, please reach out to me. I'll be very happy to answer. Alternatively, very happy to see you during one of our roadshows in the coming months. Thank you so much and have a great rest of the day. Thank you. Thank you so much. Thank you. Thank you. That does conclude our presentation for today. Thank you for your participation. You may now disconnect.