Douglas AG Stock: Strong Growth Overshadowed by Dividend Concerns

Douglas AG has demonstrated robust financial performance in its latest fiscal year, reporting an 8.7% increase in revenue to €4.5 billion. The beauty retailer's adjusted EBITDA reached nearly €809 million, while shareholder profits surged five-fold to €84 million. Looking ahead, the company projects revenue between €4.7 and €4.8 billion for the current fiscal year, targeting an operating margin of 18.3%. This positive trajectory is supported by strong performance in both brick-and-mortar and online retail segments, with the company noting a particularly promising start to the first quarter, traditionally boosted by Christmas sales and Black Friday promotions.

Dividend Policy Dampens Investor Sentiment

Despite the impressive financial results, the company's stock has faced pressure, dropping to €18.38 at times, largely due to conservative statements regarding dividend distribution. Management has linked future dividend payments to debt reduction targets, specifically requiring a leverage ratio reduction from the current 2.8 to 2.0 by the end of 2025. This cautious approach to shareholder returns has contributed to the stock's more than 25% decline since its March initial public offering at €26 per share.