Original-Research: Westwing Group SE - from NuWays AG
29.01.2025 / 09:00 CET/CEST
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Classification of NuWays AG to Westwing Group SE
Company Name: Westwing Group SE
ISIN: DE000A2N4H07
Reason for the research: Update
Recommendation: Buy
from: 29.01.2025
Target price: EUR 17.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch
Trading update confirms guidance reach at upper end; chg. est
Topic: WEW released a FY'24 trading update which points towards a sales and adj. EBITDA guidance reach at the upper end for both despite a muted consumer sentiment. In detail:
FY'24 GMV was reported up 3.3% yoy at EUR 497m (eNuW: EUR 486m) which should have been the result of a continuation of a growing avg. basket size (eNuW: +11% yoy) and a return in growth of active customers (eNuW: +2% yoy), but dampened by a decline in number of orders (eNuW: - 7% yoy). As sales develop mostly proportionate to GMV, this would imply FY'24 sales of EUR 443m (eNuW old: EUR 435m), which stands at the top-end of the EUR 415-445m guidance range.
Consequently, WEW also specified its adj. EBITDA guidance towards the upper end of the EUR 14-24m range (eNuW old: EUR 18m, eNuW new: EUR 20m, 4.5% adj. EBITDA margin). Here, we also expect the positive trend of an improving cost mix visible in Q1-Q3'24 to have positively affected profitability in Q4. The main driver should have been the improved gross margin (eNuW: +0.8% yoy) thanks to a higher private label share of 55% in FY'24 (58% in Q4'24).
Also positively, WEW reported a positive FCF of EUR 9m for FY'24e (eNuW old: EUR 2m), which implies a Q4'24 FCF of EUR 20m which should stem from a large inventory reduction. Consequently, the strong net cash position stood at EUR 69m (eNuW old: EUR 58m), despite the EUR 10m share buyback program executed in Nov'24.
Outlook 2025: Thanks to a still ongoing muted consumer sentiment, we do not expect a major demand swingback for WEW. Consequently, sales is seen to grow by 3.4% yoy to EUR 458m in FY'25e. For profitability, we expect a 0.4pp yoy margin improvement to an adj. EBITDA of EUR 23m, carried by a rising contribution margin as a further rising private label share should support a stronger gross margin (eNuW: +0.8pp yoy).
In sum a solid release, showing that WEW maintained profitable growth with positive FCFs despite a muted consumer sentiment, assortment changes, restructuring expenses and the SaaS platform transformation. Against this backdrop, we reiterate our BUY recommendation with unchanged PT of EUR 17.00, based on DCF.
You can download the research here: http://www.more-ir.de/d/31683.pdf For additional information visit our website:
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2076581 29.01.2025 CET/CEST
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