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 EUR
415-445m (eNuW old: EUR 460m, eNuW new: EUR 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 EUR 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 EUR 14m to EUR 24m (eNuW old: EUR 26m, eCons
new: EUR 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. EUR
10-15m cash impact), likely bringing FCF close to break-even in FY24 (eNuW:
EUR 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 EUR 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 EUR 18.00 (old: EUR 19.00), based on DCF.

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