Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Westwing Group SE (XTER:WEW, Financial) achieved a 3% revenue growth and a 2% GMV growth in Q3 2024, outperforming the declining German online market by 9% to 11% points.
- The DACH segment grew 9% points faster than the German online home and living market, showcasing strong regional performance.
- The company successfully increased its Westwing Collection share to an all-time high of 58% of group GMV, supporting both top line and profitability.
- Westwing Group SE made significant progress in its technology migration to a SaaS-based platform, ahead of schedule, enhancing operational efficiency.
- The company maintained a strong net cash position of EUR63 million with no debt, providing financial stability and flexibility.
Negative Points
- Free cash flow was negative at minus EUR6 million in Q3 2024, primarily due to seasonal inventory increases.
- The transition to a more premium product assortment negatively impacted the top line, particularly in the international segment, with Italy and Spain experiencing declines.
- Increased container costs and pricing pressure on third-party products partially offset the positive margin effects from the Westwing Collection share increase.
- The company anticipates a stronger negative top line impact from the product assortment transition in Q4 2024.
- One-off restructuring expenses related to complexity reduction measures amounted to EUR1.2 million in Q3 2024, impacting profitability.
Q & A Highlights
Q: Can you confirm if Italy and Spain experienced a decrease in sales, and what was the magnitude of this decrease?
A: Yes, the topline in Italy and Spain decreased, while all other countries in the international segment showed growth. This development is consistent with previous quarters and aligns with our expectations. The transformation measures in Italy and Spain, including warehouse and office closures, are now complete.
Q: What is the status of your physical store operations, and have you seen any impact on online sales in the Stuttgart area?
A: We have a standalone store in Hamburg and a store-in-store at Breuninger in Stuttgart. Both stores are performing well, and we have observed an uplift in online sales in the Stuttgart area. We are considering expanding this model but have no concrete plans to announce at this time.
Q: Could you provide more details on the gross margin improvement and the impact of product mix and freight costs?
A: The increase in WestWing collection share positively impacted the gross margin, but this was partially offset by higher container costs. Container costs were the biggest negative factor, but we do not expect them to continue rising. The current situation is stable, and we have secured about 50% of our container capacity at fixed prices.
Q: Regarding the one-off costs for the transformation, what is the expected total for 2024, and will there be additional costs in 2025?
A: We expect the one-off cash costs for 2024 to be within the range of EUR10 million to EUR12 million. This forecast is for the full year 2024, and we do not anticipate additional costs spilling over into 2025.
Q: How much of your container capacity is secured under contract versus spot market prices?
A: Approximately 50% of our container capacity is secured at fixed prices, with the remaining 50% subject to spot market prices. Additionally, about 50% of our overall purchase volume is sourced from Eastern Europe, which is not impacted by container costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
