Original-Research: Westwing Group - from NuWays AG

Classification of NuWays AG to Westwing Group

Company Name: Westwing Group
ISIN: DE000A2N4H07

Reason for the research: Update
Recommendation: Kaufen
from: 02.04.2024
Target price: EUR 18.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Mark-Hendrik Schüssler

Solid FY figures but muted 2024 outlook; est. & PT chg.

Westwing released solid final Q4 results in line with prelims but issued a mixed FY24e outlook. Sales are expected to develop within a range of -3% to +4% yoy in FY 24e, implying a 0.5% yoy sales increase at mid-point to € 415-445m (eNuW old: € 460m, eNuW new: € 442m). The guidance reflects (1) a strategic adjustment of the product offering in Spain and Italy to enhance future scalability (low to mid singledigit percentage impact) which will likely weigh on H2'24 sales and (2) ongoing challenges in the home & living market as consumers continue to hold back on higher-value products such as furniture (more pronounced effect in DACH than International).

On a positive note, Westwing has seen healthy GMV growth in Q1'24 of 6% yoy, implying a favorable development in the number of active customers and basket size after the company had already witnessed a sequential growth in active customers in H2'23 (+2% yoy) and strong LTM GMV per customer in Q4 of € 377 (+4% yoy). Furthermore, the company is on track to enter the Portuguese market in 2024 with further regional expansions planned for 2025, all of which are expected to be managed from HQ and served by its central logistics unit to achieve maximum scale effects.

Adj. EBITDA is seen to come in at € 14m to € 24m (eNuW old: € 26m, eCons new: € 23.7m) with a margin of 3.1% to 5.8% (eNuW old: 5.6%, eNuW new: 5.4%), carried by a favorable product mix (i.e. higher private label share, +6ppts yoy to 47% of GMV in FY23) and reduced fulfilment and G&A expenses due to cost savings (i.e. consolidation of logistics and warehouses; fulfiment -4.4% yoy and G&A -8.2% yoy). However, the company’s transition to a SaaS-based tech platform along with its restructuring efforts in Spain and Italy should temporarily weigh on EBIT (eNuW: -5% yoy) and FCF (c. € 10-15m cash impact), likely bringing FCF close to break-even in FY24 (eNuW: € 0.3m).

In sum, while it looks like 2024 will be another challenging year, we remain convinced of Westwing’s promising long-term prospects driven by the structural shift towards e-commerce and its unique positioning in the European Home & Living market. Having a healthy balance sheet with a sizable net cash position of € 82m and trading at ~8x EV/EBITDA 24e, Westwing offers both downside protection and a splendid opportunity to disproportionately profit from an eventual recovery of the Home & Living market. BUY, PT € 18.00 (old: € 19.00), based on DCF.

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http://www.more-ir.de/d/29285.pdf
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Contact for questions
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research. NuWays AG - Equity Research
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Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag Adresse: Mittelweg 16-17, 20148 Hamburg, Germany ++++++++++
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