Original-Research: Westwing Group SE - from NuWays AG
Classification of NuWays AG to Westwing Group SE
Q2 preview: Modest sales but margins to trend up Declining GMV and top-line should be no surprise. WEW started to change its product assortment and shift its offering more towards the Westwing Collection. This naturally comes with a hit on GMV and sales which should therefore not be a surprise. Consequently, Q2 GMV is seen at € 110m (-4% yoy) as a result of lower active customers (eNuW: -6% yoy), thus lower orders (eNuW:-17% yoy), but mitigated by a rising average basket size (+16% yoy). Accordingly, sales should arrive at € 101m (-5% yoy). More specifically, the assortment change (and the consequent sales decline) is seen to be more pronounced in the International segment (eNuW: € 42m sales, -9% yoy), whereas DACH should stay relatively stable (eNuW: € 59m sales, -1% yoy), as DACH's product assortment is already more global and premium. Rising share of own products as gross margin driver. As a direct result of the assortment change, the share of the own products called "Westwing Collection" is seen to further expedite to 63% (+10pp yoy and +1pp qoq), according to our estimates. This implies a GMV growth of the Westwing Collection of 15% yoy to € 69m, whereas third party products' GMV should decrease by 24% yoy to € 41m, in our view. This development bodes extremely well for WEW, as we estimate the Westwing Collection to yield gross margins of 57% (vs. third party products of 43%). In sum, we expect the gross margin to rise by 0.6pp yoy to 51.2%, which should nevertheless result in a decline in gross profit to € 52m (-3% yoy) due to lower sales. Rising margins across the board. The positive gross margin effect described above adds to ongoing efficiency gains in fulfilment. Here, we expect the fulfilment expense ratio to continue its decline by 1pp yoy to 19.1% of sales. This implies a total rise in contribution margin by 1.6pp yoy to 32.1% in Q2. On an absolute level, the contribution profit should therefore remain flat despite the sales decline. Further down the P&L, adj. EBITDA is actually seen to rise from low levels by 36% yoy to € 4.6m (5.2% margin, up 1.6pp yoy) on the back of conservative marketing expenses, a reduced headcount and flat overhead costs. Negative FCF expected due to inventory ramp for country expansions. Following a negative FCF in Q1 of € -8.9m, mainly due to a ramp-up in inventory ahead of country expansions, we expect a similar effect in Q2, but much less pronounced. Operating CF is seen to arrive nearly break-even at € -1m (which includes an expected € -2m of negative WC effect, mainly inventory) and with another € 1.4m of investments, we expect a FCF of € -2.4m in Q2 (H1'25e: € -11.3m). However, throughout H2, we expect a gradual inventory sell down which should lead to an overall positive FCF of € 12.3m for FY'25e v. In sum, WEW is poised for profitable growth as early as FY'26e, is therefore a clear BUY and part of our AlphaList with an unchanged PT of € 18.00, based on DCF. You can download the research here: westwing-group-se-2025-08-04-update-en-924bb For additional information visit our website: https://www.nuways-ag.com/research-feed 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. ++++++++++ The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. | ||||||||||||||||||||
2178682 04.08.2025 CET/CEST
