Hello everyone. Welcome to Mavi's second quarter 2026 earnings webcast.

Our CEO Cüneyt Yavuz will present the second quarter and first half results, followed by a Q&A session. Please note that this webcast is being recorded.

We kindly ask you to review the disclaimer and take into consideration the forward-looking statements included in the presentation accordingly. Please keep your microphones muted throughout the presentation.

I will now leave the floor to Cüneyt Yavuz.

Thank you Duygu. Hello.

Thank you all for joining us in this webcast regarding the financial results of quarter two 2026. I would like to start with an overview of the trading environment and our performance in the quarter.

The operating environment remains challenging, particularly in Türkiye. Persistent high inflation continues to weigh on purchasing power and consumer demand, while competition across the apparel market is ongoing.

Against this backdrop, we remain focused on the areas within our control and continue our execution with discipline and confidence. Our right product, right price, and premium quality strategy, supported by our flexible supply chain and effective planning, continues to deliver good results.

Strong brand execution, continuous customer engagement, and dynamic product and price positioning has supported further improvement in our gross margin. At the same time, disciplined inventory and working capital management enabled us to generate more than 2 billion Turkish liras in operational cash flow, preserving our robust balance sheet and financial flexibility.

Profit before tax more than doubled year-on-year, increasing by 117%. Turning to Türkiye, our strong market positioning and continued investments in the brand supported volume performance in a softer consumer demand environment.

Total retail sales volumes increased by 7.3% year-on-year. The online channel in Türkiye remains highly competitive, with elevated promotional activity, particularly on marketplace platforms.

While this puts pressure on online revenue growth figure, sales volumes are holding strong, with 8% year-on-year growth in the quarter. Our international operations, driven by US retail growth, also maintained positive momentum, with sales increasing by 3% in constant currency.

In the quarter, the United States delivered 24% year-on-year revenue growth. This year marks Mavi's 35th anniversary, an important milestone for a brand that has grown from Türkiye into an international lifestyle brand while staying true to its denim roots.

We lead the Turkish jeans market, rank among the top three brands in overall apparel market, and remain the destination for casual wear. Our focus on denim innovation and fit variety further strengthens Mavi's top-of-mind leader position in jeans.

Always looking ahead, we continue to invest behind this brand strength. We maintain an always-on communication with our customers and have further elevated our marketing and brand investments this year.

Together with our strong-standing brand ambassadors Kıvanç Tatlıtuğ and Serenay Sarıkaya, we continue to strengthen Mavi's premium brand image and communicate the stories behind our iconic jeans and brand identity. We are also deepening our connection with younger generations.

This year, Zeynep Sönmez and Kenan Yıldız joined the Mavi team of celebrities. Both are exceptional young athletes who represent the energy, ambition, and authenticity we associate with Mavi, and are inspiring role models for the next generations.

Finally, our commitment to long-term value creation continues to gain recognition both in Türkiye and internationally. In the first half, Mavi was named a Most Honored Company in the Extel EMEA survey for the third consecutive year.

We ranked fourth among 400 companies in Forbes Türkiye's Best Employers survey, and became the first and only apparel brand from Türkiye to be included in the S&P Global Sustainability Yearbook 2026. We were also included in the FTSE4Good Index Series in recognition of our environmental, social, and governance performance.

These recognitions reflect the strength of Mavi not only in terms of financial and operational performance, but also as a brand, an employer, and a responsible company. Overall, I believe our first half performance demonstrates the resilience of our business in a challenging operational environment.

We continue to improve gross margin, generate cash, and maintain a strong balance sheet, while investing in our brand, our customers, and the capabilities that will support Mavi's long-term growth. With this introduction, let's quickly review our results for first half 2026.

Consolidated revenue declined 1.1% year-on-year and realized at 25 billion 842 million Turkish liras. Türkiye retail sales was flat, while Türkiye online sales declined by 2.9% in the first half of 2026.

Our EBITDA for the period is 4 billion 679 million Turkish liras, resulting in 18.1% EBITDA margin. We recorded 807 million Turkish lira net income in the first half of the year.

With 682,000 new customer acquisitions in the first six months of 2026, the number of active loyalty card members now stands at 6.2 million. Moving on to review our channel performance on slide seven, despite all the challenging conditions weighing on consumer demand, total Türkiye sales grew .4% in the second quarter, resulting in an .5% contraction in the first half.

Within that, retail sales performance was most resilient, staying flat year-on-year, while wholesale contracted 1.5% and e-com contracted 2.9%. Total international revenue, constituting 9% of total consolidated sales, was down 7.4% year-on-year in inflation-adjusted Turkish lira terms, but grew 1.4% in constant currency in the first half of 2026.

The US business recorded 18% growth in US dollar terms in the first half of 2026. Looking into our Türkiye retail business in more detail, we remain committed to strengthening our physical presence in Türkiye through disciplined, return-focused investments.

New stores opened over the past two years are delivering positive contributions, while expansions and renovations are driving improvements across key store KPIs and enhancing the overall customer experience. Our retail development plans for 2026 are ambitious, with a significant part of the pipeline scheduled for the second half of the year.

As of the end of July, we are on track with our four new store openings, four closures, seven expansions, and 14 store upgrades. To bring you fully up to date, as of today, we have completed seven new store openings, five closures, seven expansions, and 19 renovations and upgrades, demonstrating the strong pace of execution since quarter end.

Let's briefly elaborate on the like-for-like store performance on the next page. In the second quarter, like-for-like sales increased by 31.3% in nominal terms, corresponding to a .6% decline in real Turkish lira terms.

Our category mix and pricing strategy supported gross profitability while preserving market share. The underlying like-for-like dynamics reflect this approach, with the average basket down 3.9%, offset by a 3.5% increase in the number of transactions.

Importantly, like-for-like sales volumes increased by 5.8% in quarter two, bringing first half volume growth to 2.5%. Including the contribution from new square meters, total Türkiye retail volumes grew by 7.3% in the quarter and 4% in the first half.

Now let's move on to slide 11 to review category-based developments in Türkiye retail. In the second quarter, we recorded volume growth across all categories.

The variation we see in the first half category performance, therefore, largely reflects the dynamics of the first quarter. Denim performed broadly in line with the overall business, with first half sales down 2% year-on-year, mainly due to a slightly weaker performance of denim shorts and tops, while jeans remained relatively resilient.

Knits were significantly affected by unfavorable weather conditions in the first quarter. The category recovered in quarter two, posting 2.3% real growth, bringing the first half decline to 4%.

Jackets were down 8% in the first half, largely reflecting a strong comparable base. Given the seasonality of this category, the full-year performance will provide a more meaningful indication of the underlying trend.

Our non-denim categories maintained their positive momentum, with accessories and non-denim bottoms both growing 8% in real terms. This performance supports our category diversification strategy, while contributing positively to profitability and new customer acquisition.

It also demonstrates the benefits of our larger store formats, which provide greater space and visibility to showcase a broader product offering. Now let's go forward to review our online sales performance on page 13.

Global online sales, including sales generated through our wholesale partners' online channels, represented 10% of consolidated revenues in first half of 2026. In Türkiye, with 5.7 million active Mavi App users, mavi.com continued to outperform other online channels.

Revenue declined .6% on mavi.com, compared to a 5.5% decline on marketplace platforms. Türkiye online business accounted for 7.8% of total Türkiye sales during the first half of the year.

International online sales declined by 6.6% in inflation-adjusted real terms, primarily due to a significant contraction in the wholesale channel. International mavi.com continued to perform well, delivering 1.7% growth in real Turkish lira terms and 13% growth in constant currency.

Overall, online sales represents 33.9% of total international revenues. Now let's move on to review our consolidated financial results.

Against a backdrop of heightened global economic uncertainty and the continued challenging demand environment in Türkiye, we are pleased to have improved our underlying gross margin by 160 basis points in the second quarter and 190 basis points in the first half. This performance reflects the strength of our product planning capabilities, our flexible and agile sourcing model, and the effectiveness of our pricing and category management strategies.

Reported gross margin reached 53.1%, where lower imputed interest impact was mostly offset by lower inflation accounting impact. Moving on to slide 16 to review our EBITDA performance, we generated 2 billion 65 million Turkish liras of EBITDA in the second quarter, growing 4% year-on-year, while EBITDA margin also improved 70 basis points, realizing at 16.4%.

The 200 basis points increase in the OPEX to sales ratio was mainly offset by higher gross margin. Let's look into our net income margin performance.

Given better operational profitability and lower financial expenses in the second quarter, our profit before tax grew 117% to 505 million Turkish liras. As we have discussed in previous quarters, inflation accounting has a disproportionate impact on asset-light companies with strong equity positions, such as Mavi.

With inflation accounting no longer applied to statutory financials since end of 2025, this impact is now reflected more prominently through the effective tax rate. In the second quarter, our effective tax rate is 53%, compared to 6% in the prior year.

This resulted in 239 million Turkish liras of net income in Q2 2026, growing 9% year-on-year and corresponding to a net margin of 1.9%. Net income for the first half of the year realized at 870 million Turkish liras with 3.1% margin.

On slide 18, we will review our operational cash flow and working capital performance. We continue to efficiently manage inventory and working capital, ensuring operational agility.

I'm pleased to share that our consolidated inventory levels remain at a very healthy territory, being 7% lower than same period last year, and comprises mostly of fresh fall/winter season products. Having said that, I would like to highlight one point for the coming periods.

As our square meter expansion strategy results in a growing number of larger store formats, the business will naturally require somewhat higher inventory levels to support the broader selling space and product offering. This is a planned evolution of our inventory needs, designed to improve product availability and support sales productivity across our expanded store network.

Therefore, in the coming quarters, we consciously plan to see Mavi operating with slightly higher inventory levels as these investments progressively come on stream. Moving on to the next slide, in the first half of 2026, we invested 1 billion 325 million Turkish liras in capital expenditure, resulting in a CAPEX to sales ratio of 5.1%.

Türkiye retail investments, including store openings, expansions, renovations, accounted for 55% of total capital expenditures. Approximately 22% was related to investments in our US retail operations, while 11% was allocated to R&D and 8% to digital initiatives.

As always, the foreign currency debt reflected in our consolidated financial statements relates exclusively to our international subsidiaries, which borrow in their respective local currencies. As a result, these borrowings do not create a material foreign exchange risk at the consolidated level.

Given our first half performance and the higher inflationary trajectory in Türkiye compared to expectations at the beginning of the year, we are revising our full-year top-line guidance. At this stage, we expect to close 2026 with consolidated revenue ranging from flat to a low single-digit decline in real terms under IAS 29 inflation accounting.

Our retail investment plans and EBITDA margin guidance remain unchanged. I would also like to share some early observation on our third quarter trading.

August marks the end of summer season and is typically characterized by elevated promotional activity across the industry. As such, we view the month as less representative of underlying new season performance.

During August, Türkiye retail sales grew by 25% in nominal terms, while online sales increased by 30%. The first two weeks of September delivered 24% nominal growth in Türkiye retail sales, with the back-to-school season beginning to gain momentum toward the end of the period.

In the second week alone, retail sales grew by 42%, providing an encouraging early indication of back-to-school trading. Looking ahead, our focus is on navigating the current environment with discipline without compromising Mavi's long-term potential.

We will keep investing in our brand, customer experience, and retail network, with the ambition to strengthen market share, build deeper customer relationships, and translate these investments into sustainable, profitable growth. Before ending my presentation, I have one final important announcement to make.

Our board of directors has decided to initiate a second phase of share buyback transactions. The objective is to protect the interests of all our stakeholders, support sound price information and share price stability, and contribute to long-term shareholder value through the cancellation of the repurchase shares following its completion.

The program will have a maximum duration of one year, with 1 billion Turkish liras of allocated funds. I would also like to highlight two important points regarding the execution of the program, particularly to provide clarity around how investors should interpret our daily buyback activity.

First, under Capital Markets regulations, our buyback orders are placed as passive orders. This means we do not actively chase the market price.

Whether an order is executed depends on market conditions and trading activity at the relevant price levels. Please make note that on certain days, orders may be only partially filled, and on the others, there may be no execution at all.

Second, Mavi applies a 40—14-day no-purchase period ahead of each financial result announcement. We do not conduct any share buyback transactions during this period.

This is a clear internal rule that we apply consistently around our financial reporting calendar. Taken together, these execution principles mean that buyback activity will not necessarily be linear or evenly distributed throughout the program.

We will execute the program within the announced framework and applicable regulations, while maintaining our disciplined approach to capital allocation. At this point, I'm more than happy to take any questions you may have.

Thank you for joining and being with us in this presentation.

Ladies and gentlemen, if you wish to ask a question, please raise your hand and we will call your name. If you prefer to type your questions, you may use the chat screen.

For those of you who have dialed in via audio, we will take your questions last when there are no more questions left on the platform. Our first question comes from Yapı Kredi, Eren Erciş.

Eren, please go ahead.

Hello. Thank you for the presentation, and congratulations for the results.

I have couple questions. The first one is on the US side.

As I see, the business is growing, but how much of the CAPEX went there, and what's the US contribution to consolidated EBITDA right now? When do you expect it to become meaningfully profitable?

The second one is on Türkiye stores. Most of the 15 net openings seem to be left for the second half.

How confident are you in hitting that, and what size should we expect for the new stores? I'm talking about actually average selling space per store.

The third one is on margins. Gross margin was up about 240 bps despite weaker real pricing and higher personnel cost.

How much of that would you attribute to product mix? Could you more elaborate that?

That's my questions. Thank you for the presentation again.

Yes, sir. I'm just checking just the numbers.

Of our total CAPEX, approximate as I just mentioned, 22% was related to investments in our US retail operations. You can figure that out versus the 1 billion 325 million that we have invested.

About 1/5 of that has already been directed towards US operations. In US, within a couple of months, we will have reached the initial target number of stores that we wanted to open in the US.

There are, I think, two more stores that are being built as we speak. If I'm not mistaken, one is in Denver, and the other is in Florida, in Jacksonville.

That will bring us to between, depending on how you count the stores because we have also stores as for two stores relating to Brooklyn Industries, should be bring us to around 15 dedicated Mavi stores, in total 17 stores in the US. In terms of how the business is going, it is of course, as we open up new stores, it is definitely positively contributing to our top-line growth.

In terms of net contribution to EBITDA, etc., there is still time to go. We are now mostly in an investment stage.

When it comes to the international markets, at this point, the board of directors chooses to sort of continue to report the international business as one consolidated number. I think over the course of the next couple of quarters, once we review how the US's business is going, then I will be in a position to separately start reporting for the investment community as we are making our conscious effort in terms of growing our US business, to give you more flavor in terms of what we are doing there.

At this point of time, if you are doing any calculations or guidance from me, don't expect a positive contribution because we are in an investment mindset, opening new stores where we are taking some hits in terms of store contributions and a ramp-up period, and more to come. It's really, really, really early days to definitely be in a position to guide you this way or that way in terms of when and how things will play out.

In terms of store openings and space, for the rest of the year in Türkiye, we are confident. We believe we will hit our guidance and maybe potentially even have some sorts of positive surprises.

Looking at our pipeline, expansion plans, and refurbishments, actually we have more stores than what we are suggesting here that we could potentially have through, but as there can be always some delays and cancellations, we maintain our current guidance, and we think these numbers are achievable. In terms of the space, at this current pace, if you're doing any calculations, estimates, calculating around 1,000 square meters for each and every new store or square meter growth directionally would be right.

Some of them will be 800, 900 square meters, depending on the location, and there will be others that will be 1,200, 1,300 square meters, but an average indicator of 1,000 square meters is the right methodology to follow. That's what I'm using in terms of category and product planning.

In terms of gross margin, I think Mavi is doing a great job in terms of gross margin. Definitely product mix has a positive impact, but you will all recall that all the categories, as well as all the channels, meaning e-com to retail, have a similar contribution and business model within Mavi.

Meaning our denim business is profitable, just as well as our t-shirts are profitable, just as well as our non-denim bottoms are profitable. Therefore, consumer tendencies, trend tendencies, or migrations, or growth for that matter, in any one direction has, generally speaking, a relatively neutral impact.

We have been growing our kids business, we have been growing our accessories business, and we have been growing our non-denim bottoms business. I'm also happy to say generally these categories are potentially even one or two points higher in terms of gross margin vis-à-vis, let's say, outerwear, which is in terms of total gross profit as a greater sum, but as a margin, they typically have a lower contribution because of its more competitive nature and a higher ticket item.

Therefore, moving into fall/winter, typically we will have more, of course, outerwear coming in, especially in winter, which typically makes the fall/winter a little more challenging for us when it comes to gross margin management. What we try to do through the season is capitalize on categories outside of outerwear, like non-denim bottoms, shirts, kids, accessories, to sweeten that mix so that we can maintain and, as we always try to do, hopefully even come out with better than expected gross margin improvement.

Just as we are on this, I think the overall challenge for Mavi, and I'm giving this as an extra comment and introduction, is I think typical for many of the Turkish companies, where I think we are in a blessed situation where we have a very strong working capital and balance sheet. We don't have debt, and we're able to generate cash.

This is something we want to continue. On the other hand, of course, pressures in terms of energy pricing, overheads, and OPEX-related costs are still on a momentum.

As the inflationary targets that we started the year with in terms of the mid-term targets of the central bank and the government are falling short of expectations, and we were hoping that we would have better numbers, but now the inflation seems to be 5% to 10% higher than what was expected, primarily due to regional conflicts and energy prices. As many companies, we are more struggling or under more pressure when it comes to OPEX management and costing kissing in that front.

I'm confident with the productivity of my team, technology, AI, intelligence, and also the disciplined approach where we are putting our money. This is my job.

It's something that I have to deal with, but down the road, I think this is something we will come out on top and be one of the better companies that manages its pressures coming that are hitting the bottom line of the company. I hope that covers some of the questions, hopefully, that you've asked.

Thank you.

That was helpful. Thank you.

You're welcome.

Ece, you can go ahead, please.

Thank you very much for the presentation. There was news regarding one of your suppliers ending operations in Türkiye this week.

As far as I know, you also shift some of your sourcing to Egypt. Could you provide an update regarding the cost level Egypt versus Turkey, and what additional effects in terms of working capital management could that bring in a shift in your procurement?

Thank you very much.

Thank you, Ece. Yes, unfortunately, one of the key players in the Turkish market, also global denim market, in terms of fabric manufacturer, decided to exit the business.

This year Mavi's celebrating its 35th year, and for many years, from the day one inception, it was one of our key business partners. We had, of course, the privilege and opportunity, a heads-up opportunity of them sharing with us ahead of their business decision so that we could redevelop and move some of the product needs to other manufacturing sites to have minimal business disruption.

I think this is a testament, of course, also of Mavi's working relationship with many of its suppliers. In terms of also our credit department, finance department, as well as sourcing department really staying close and on top with our sourcing environment and, let's say, the whole infrastructure.

Mavi has been producing in Egypt not just recently, but has been producing for more than 30 years. This is something not many people realize.

Yes, there is currently in Turkey many brands, especially over the last couple of years, trying to find ways and find inroads into growing their business in Egypt and establishing new business models in Egypt. For us, what's the biggest priority is quality.

Then price, of course. Again, just to give you another flavor, we have a country manager of sourcing based in Egypt with a team who is managing with our sourcing partners there for more than three years now.

We are already a well-established company when it comes to sourcing and contacts in the Egyptian market, on top of the 30-plus years of experience of our denim relationship in Egypt. In terms of what we're trying to manage is a gross margin stability.

Trying to move products from, let's say, Vietnam to Turkey to Egypt from Egypt to Serbia, the number one priority, of course, is first and foremost get the right product, right time, quality. You must always remember, Ece, that we are in the end a retailer.

You have to first have the right product, right quality, and the second the right time. Then the second thing is get the right amount so we can sell it to the consumers so that we can have a best-in-class working capital and keep the products moving.

I'm very proud that we're able to do this. Gross margin is a follow-through.

It's a sort of an outcome. Typically, if you do all of this, meaning have the right business partners who are manufacturing for you, have the right capacity planning, have the right fabric planning, because we do go deep dive, not only just placing products as a whole, but we are looking into fabric, accessories, threads, buttons, zippers, the whole details of building a pair of pants and making sure that all the components come as we sort of dictate them to our manufacturers.

Yes, moving around helps. Moving from one place to another, in the Egyptian case, because coming back to a specific question, the labor cost will come down, but on the other hand, there will be time cost and there will be some OPEX-related cost by moving products there.

Typically there's a trade-off. If you just look at one component, it would be a misleading approach.

Actually, unfortunately or fortunately, I'll just comment also on this and a bit of extra words again. Many Turkish manufacturers moving into Egypt because labor is cheap is finding out that labor as a component on its own being cheap is not enough to get the right results, because manufacturing a certain product also requires the know-how of the people there, getting these operations system up and running, and there will be other inefficiencies in the system.

Again, for Mavi, these things don't hold because we are already working with the right manufacturers and we have already taking the right actions. Mavi right now has a one plus one strategy, meaning for every domestic manufacturer, we have a ghost or an alternative international manufacturer that will meet our standards, whether it comes to gross margin, quality, and on-time delivery.

This has become a new trend and it's a new stress point, but I'm very proud to say that as a global company, our sourcing team is also a global sourcing team, and they're able to maintain our business as we go through. This is part of the textile apparel business.

From time to time, certain countries will be more expensive, some will be cheap. There will be wars, unfortunately, there will be taxes, there will be tariffs, and Mavi is able to mitigate and find the best optimum scenario, which is never gonna be, I can be quite confident, never gonna be more worse than any of our competitors in terms of the current playing ground.

It's an externality, but it's an externality I see where we can handle the best. I don't think we're going to be short-selling vis-à-vis whether it's Inditex, Zara Group, or LC Waikiki, Koton, DeFacto, the local manufacturers.

I hope that gives you a sense of where we're heading. I would say just, generally speaking, look at me and Duygu in terms of our guidance, in terms of how we think gross margin is going to run.

I think whether it's international, domestic is a bit secondary. Thank you.

Do we have any other questions? It seems like we don't have any other questions.

Thank you for your attendance and contribution to our webcast. Should you have any follow-up questions, please don't hesitate to reach out.

Hope to see you again in three months' time.

Thank you. Bye-bye.