Westwing Reports Second Quarter 2019 Results
- Second quarter results in line with expectations as indicated in guidance update from May 2019, with EUR 58m revenue (-1% year on year growth) and an Adjusted EBITDA margin of -8%
- Growth affected by ongoing challenges in Italy and lower than expected number of new customers from marketing activities; profitability mainly impacted by one-off costs of a delayed warehouse move that has now been successfully completed
- Own and Private Label share increased to 22% of GMV, +7 percentage points year on year; new Westwing Collection Spring/Summer launched in May
- Positive outlook for the second half of 2019 and Q4 in particular, with root causes fixed and leading indicators positive
- Stefan Smalla, Founder and CEO of Westwing: "After a mixed first half-year, we expect to return to profitable growth by the end of 2019."
Munich, August 13, 2019. Westwing, the leader in inspiration-based Home and Living eCommerce in Europe, reports on financial results.
Results for the second quarter 2019
Growth in the second quarter of 2019 was roughly flat resulting in revenue of EUR 58m (Q2 2018: EUR 58m). While customer loyalty remained very strong, marketing efforts were not yet driving growth in the customer base sufficiently, and the assortment did not include enough high-converting low-price-point products. Furthermore, challenges in Italy dragged down overall performance.
Profitability in the second quarter of 2019 was particularly impacted by the effects of a delayed - and by now successfully completed - warehouse move that resulted in one-off costs and logistics inefficiencies. Additionally, lack of revenue growth led to negative operating leverage on the SG&A cost base.
Westwing successfully managed to further increase its Own and Private Label share to 22% of GMV in the second quarter of 2019, up by +7 percentage points year on year. The new spring/summer Westwing Collection was launched in May with positive responses from customers and social media.
Return to profitable growth expected for fourth quarter
Westwing has implemented a number of measures to eliminate the causes of the growth and profit impeding issues described above. The company has now paved the way for a stronger second half-year 2019 and is expecting to return to profitable growth in the fourth quarter.
- Westwing has increased its marketing investments, with a particular focus on social media, to boost the acquisition of new customers. Further, more low-price point products have been added to the assortment for better conversion. Initial results are very promising, with leading indicators pointing at higher growth in the second half of the year.
- The warehouse move from Berlin to Poznan (Poland) has been successfully completed, resulting in improved logistics and cost efficiencies. Westwing will continue to improve contribution margin strongly, with further Own and Private Label share gains.
- Westwing expects to see operating leverage on its SG&A cost base through increased growth in the second half of the year. In conjunction with the expected improvements of the contribution margin, this is expected to lead to significant profitability improvements in H2 2019.
"After a mixed first half-year, we expect to return to profitable growth by the end of 2019. To do so, we have taken decisive measures which are firmly supported by Westwing's high customer loyalty and strong business model," says Stefan Smalla, Founder and CEO of Westwing. "We believe that the last months have been the trough and we are already seeing leading indicators pointing in the right direction, based on the hard work of our team."
Westwing confirms its updated guidance for revenue growth of 6 to 12% for the full year and adjusted EBITDA within a range of -1% to +1%. Management expects to finish the year 2019 at the lower end of these ranges.
Westwing's net cash position remains very strong at EUR 78m, and free cash flow is expected to be roughly neutral for the remainder of the year.
Share buy-back announced
Westwing yesterday announced a share buy-back program with a consideration of up to EUR 4m and up to 0.8m shares to settle employee stock option grants. This represents approximately 3.9% of the currently 20,740,809 shares outstanding. The program is scheduled to commence August 14, 2019 and will end at the latest on December 31, 2020. To the extent required and legally permissible, the share buy-back program can be suspended and also resumed at any time. The Company will give regular updates about the execution of the share buy-back program on its website under the Investor Relations section.
For more information, please visit the Westwing corporate website at: www.westwing.com
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Westwing is the leader in inspiration-based Home and Living eCommerce in Europe with EUR 254m of revenue in 2018. Through its 'shoppable magazine', Westwing inspires its loyal, mostly female customers with a curated product selection and combines that with gorgeous content. With unparalleled loyalty, Westwing is generating 85% of sales from customers who visit the company's sites and apps on average 100 times per year. Westwing's mission is: To inspire and make every home a beautiful home. The company was founded in 2011 and is headquartered in Munich. Westwing went public on the Frankfurt Stock Exchange in October 2018 and is active in eleven European countries.
Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made and are subject to significant risks and uncertainties. You should not rely on these forward-looking statements as predictions of future events and the Company undertakes no obligation to update or revise these statements. The Company's actual results may differ materially and adversely from any forward-looking statements discussed in this press release due to a number of factors, including without limitation, risks from macroeconomic developments, external fraud, inefficient processes at fulfilment centres, inaccurate personnel and capacity forecasts for fulfilment centres, hazardous material / conditions in production with regard to private labels, lack of innovation capabilities, inadequate data security, lack of market knowledge, risk of strike and changes in competition levels.
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