Original-Research: Westwing Group SE (von NuWays AG): BUY

Classification of NuWays AG to Westwing Group SE

Company Name:	Westwing Group SE
ISIN:	DE000A2N4H07
Reason for the research:	Update
Recommendation:	BUY
from:	05.12.2024
Target price:	EUR 17.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Henry Wendisch

Solid black week in the books, guidance well in reach; chg. est

Topic: During last weeks black week, which is a main driver of Q4 revenues, WEW has performed in line with its own expectations, posing the upper half of the sales guidance in reach. However, the still muted consumer sentiment does seem to turn positive in the near-term. In detail:

After having spoken to the company, WEW is satisfied with its black week performance which was 'in line with expectations'. Therefore, we keep our Q4 sales estimate (eNuW: € 125m sales; -5% yoy) unchanged. Mind you, the decision of to change the product assortment in certain countries towards a more global one, is the key reason behind the expected revenue decline in Q4.

Accordingly, the FY'24e sales guidance range of € 415-445m (-3% to +4% yoy; eNuW: € 435m, +1.5% yoy) should be reached in the upper half. This is further supported by management's statement, that a revenue decline in FY'24e is 'unlikely'. Due to the ongoing brand marketing campaign, we expect the adj. EBITDA guidance of € 14-24m (3-5% margin) to be met at midpoint (eNuW: € 18m).

Looking ahead, FY'25e will likely remain a year with muted consumer sentiment. However, the company has shown to outperform the market throughout 9M'24, mainly driven by a growing user base and increasing average basket size. For FY'25e, we expect the trend of growth in users and average basket size to continue, but at lower rates. Moreover, WEW plans to expand into other European countries and to open physical stores in important DACH cities (e.g. Munich, Berlin, Vienna), supporting sales as soon as FY'25e, however with a full-year effect in FY'26e. On the other hand, the product

assortment change should negatively affect sales growth from Q1-Q3'25e and thus dampen the effects described above. In sum, we expect a 5% top line growth in FY'25e, which would imply an adj. EBITDA of € 22.5m (+24% yoy) thanks to a beneficial cost mix and a rising private label share driving up gross margin.

In sum, WEW's management used the time of a depressed consumer sentiment wisely and shaped WEW into a leaner and more scalable company, which bodes well in case of a consumer rebound. Until then, WEW remains a profitable, net cash and FCF positive company, serving as a downside protection and providing an attractive risk-return profile, in our view. Hence, we reiterate our BUY recommendation with new PT of € 17.00 (old: € 17.50), based on DCF.

You can download the research here: http://www.more-ir.de/d/31491.pdf
For additional information visit our website: www.nuways-ag.com/research

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
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