windeln.de with 16% sales growth in Q3 2017 and consistent continuation of strategic measures to sustainably increase profitability
- Q3 sales of EUR 52.9 million (9M: EUR 159.4 million); Increase of 15.8% compared to the same period of the previous year (9M: +15.8%)
- China (Q3 sales +27.8% year-on-year) and other European countries (+23.6%) continue to drive growth
- Adjusted EBIT margin in Q3 of -10.3% improved compared to Q3 2016 (-14.5%) and Q2 2017 (-10.5%); in the nine-month period of 2017 at -11.6% after -14.1% in 9M 2016
- Change in liquidity position by EUR -11.3 million in Q3 due to expansion of local warehouse in China, Bebitus integration and acquisition-related earn-out payments
- Integration of Bebitus successfully implemented on October 1, 2017
Munich, November 14, 2017: windeln.de SE, one of the leading online retailers for baby and toddler products in Europe and for customers in China, generated sales of EUR 52.9 million in the third quarter of 2017. Compared to the same period of the previous year, this corresponds to an increase of 15.8% (Q3 2016: EUR 45.7 million). Based on the adjusted EBIT margin, the Group improved its profitability from -14.5% (Q3 2016) to -10.3% in the third quarter of the current year. Over the first three quarters of 2017, the adjusted EBIT margin was -11.6% (9M 2016: -14.1%).
China and other European countries as growth drivers, continuation of profitability orientation in the DACH region
In China, sales in the third quarter of 2017 amounted to EUR 26.8 million, an increase of 27.8% compared to the same period of the previous year (Q3 2016: EUR 20.9 million). Overall, business in China continues to contribute around half of sales revenues at Group level.
In other European countries, sales in the third quarter amounted to EUR 16.3 million. Compared to the same quarter of the previous year, this corresponds to an increase of 23.6% (Q3 2016: EUR 13.2 million). A key driver of this development in the European markets continues to be the growing online penetration. The constant sales compared to the second quarter of 2017 are due, among other things, to seasonally lower sales in the summer months.
In the DACH region, sales in the third quarter of 2017 declined by -14.7% compared to the same period of the previous year and amounted to EUR 9.9 million. This means that they account for 18.6% of Group sales (Q3 2016: EUR 11.5 million). The reason for this development is the focus on profitable sales, which has already begun since the first quarter of 2017, which is primarily reflected in a clear margin orientation and lower total volume of marketing expenses. The implementation of this strategy is also reflected in the increased repurchase rate of 83% for the Group in Q3 2017 (Q2 2017: 76%). In addition, sales in Switzerland were temporarily lower than in the second quarter following the closure of the Swiss office to reduce selling and administrative expenses.
Alexander Brand, founder and board member of windeln.de, comments: "We consistently continued our strategy in the third quarter. In concrete terms, this means that we implemented the integration of our Spanish subsidiary Bebitus into the Group as planned as of October 1, 2017. At the same time, we continued to focus on earnings in the German-speaking markets. Our goal is to return to the growth path in the DACH region in the future without neglecting profitability."
Improvement in adjusted EBIT margin
The adjusted EBIT margin improved to -10.3% in the third quarter of the current year after -14.5% in the same period of the previous year (-16.6% including discontinued Shopping Clubs) and Q2 2017: -10.5%. Over the period from January to September 2017, the EBIT margin amounted to -11.6% (9M 2016: -14.1% and -15.7% respectively, including the discontinued Shopping Clubs division).
The respective expenses for marketing and fulfilment could be reduced both in absolute terms and relatively (in relation to sales). At 4.8%, the operating contribution margin (difference between gross profit and expenses for marketing and fulfilment) as an important indicator of corporate management in the nine-month window of 2017 was approximately 2.2 percentage points above the previous year's figure (9M 2016: 2.6%). Compared to the second quarter of 2017, the operating contribution margin was slightly lower in the third quarter. This was due to a lower gross profit margin, which is mainly due to an increasing foreign share and the associated product mix.
Other selling and administrative expenses improved slightly in relation to Group sales and amounted to 16.4% after nine months after 16.6% in the same period of the previous year. This cost block also developed positively compared to the previous quarter. Further measures to improve operational efficiency are still being implemented.
"We are making further progress on a major project to improve our cost base – the relocation of our central warehouse from Germany to Poland. This is to be implemented in the course of the first half of 2018," explains Jürgen Vedie, COO and member of the Executive Board of windeln.de.
Local warehouse in China and Bebitus integration measures increase net working capital
As of September 30, 2017, net working capital amounted to EUR 9.5 million after EUR 4.3 million as of June 30, 2017. The increase is due to two main factors. On the one hand, the company has built up inventory in a local warehouse in China, which is supplied by time-consuming sea; on the other hand, a buffer stock was built up in the run-up to the integration of Bebitus. The Group's cash and cash equivalents (including time deposits and cash with limited disposal) amounted to EUR 31 million as of September
30, 2017. This item was EUR 11.3 million lower than at the end of the second quarter. In addition to the increase in net working capital, the earn-out payments to the founders of Bebitus in the amount of EUR 1.7 million also made a significant contribution to this change.
CFO and Executive Board member Dr. Nikolaus Weinberger explains: "Compared to the previous year, steps taken so far to improve the cost and margin position are already having an impact on adjusted EBIT. We expect further material effects in 2018."
Selected key figures for the nine-month period 2017 and the third quarter of 2017 (excluding the discontinued Shopping Clubs division)
|9M 2017||9M 2016||Q3 2017||Q3 2016|
|Revenue (million euros)||159,4||137,6||52,9||45,7|
|Contribution margin (million euros)||7,7||3,5||3,2||0,7|
|in % of turnover||4,8%||2,6%||6,0%||1,5%|
|Adjusted EBIT (EUR million)||-18,4||-19,3||-5,5||-6,6|
|in % of turnover||-11,6%||-14,1%||-10,3%||-14,5%|