Märkte & Kurse

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Original-Research: Westwing Group SE - from NuWays AG

09.08.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
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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:                       09.08.2024
     Target price:               EUR 17.50
     Last rating change:
     Analyst:                    Mark Schüssler

Solid Q2'24 results // FY'24 guidance confirmed; chg.

Westwing released solid Q2 results and was able to continue the trend of yoy
GMV growth witnessed in the recent quarters (+5% yoy to EUR 114m in Q2). Q2
sales were slightly higher than expected and increased by 4.1% yoy to EUR 106m
(eNuW: EUR 104m), driven by healthy growth in active customers (+2% yoy to
1.28m) and a surging basket size (+11% yoy to EUR 198). DACH grew 4.5%, while
International remained flat yoy, implying continued market share gains amid
a flat German online Home & Living market yoy.

At the same time, adj. EBITDA was below estimates at EUR 3.9m in Q2 (eNuW: EUR
5.7m), representing a margin of 3.7% (-0.7ppts yoy), as a result of elevated
investments in brand awareness, which - although flagged in our last update
- came in higher than expected. Having said that, Westwing's higher
marketing ratio should be regarded as a net positive since it allows the
company to increase share of mind with the consumer which eventually can be
translated into a higher share of customer wallet once the macroeconomic
picture improves.

Nonetheless, Westwing demonstrated a contribution margin expansion of
+1.8ppts yoy to 30.6%, thanks to a favorable product mix (i.e. significantly
higher private label share, +7ppts yoy to 53% of GMV in Q2), and reduced
fulfilment expenses (-1.4ppts yoy) as a result of cost savings through
consolidation in logistics. Working capital increased by EUR 7.7m but was once
again negative at EUR -11m (Q1: EUR -19m) due to payment-related timing effects
in Q1 as well as the seasonal build-up of inventory, leading to Q2 FCF of EUR
-7.3m (Q2'23 FCF: EUR 0.2m).

The company confirmed its FY24 guidance with sales growth seen at 3% to 4%

yoy to EUR 415-445m (eNuW new: EUR 435; eNuW old: EUR 442m). Management continues

to expect H2'24 sales to be weighed down by complexity reductions and
strategic adjustments of the product offering in Spain and Italy (now
completed) as well as Czech Republic, Poland, and Slovakia (to be
implemented in H2), and the ongoing challenges in the general home & living
market.

The adj. EBITDA outlook was reiterated at EUR 14m to EUR 24m, implying a 3-6%
margin (eNuW new: EUR 18.5m; eNuW old: EUR 23.7m). Considering EUR 10.2m adj.
EBITDA in H1, the bottom-line guidance looks achievable, in our view, while
FCF for the full year should likely be close to break-even (eNuW: EUR 0.3m)
due to one-off restructuring costs (i.e. complexity reduction, SaaS
transition) and normalizing inventory patterns.

All in all, the company impresses with (1) a clear vision and action plan
for reviving and continuing its growth story, (2) management's longterm
focus over short-term considerations, and (3) its cost-conscious and
sensible capital allocation to the benefit of the brand. Considering the
currently very undemanding valuation, we continue to like the stock and
reiterate our BUY rating with a changed PT of EUR 17.50 (old: EUR 18.00), based
on DCF.

You can download the research here: http://www.more-ir.de/d/30413.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
++++++++++
Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
++++++++++

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1964457 09.08.2024 CET/CEST

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