Munich, May 28, 2019: windeln.de SE ("windeln.de", "Company" or "Group"), one of the leading online retailers of family products in Europe and for customers in China, today published its financial figures for the first quarter (Q1) of 2019. In Q1 2019, the company generated revenues of EUR 20.8 million and an adjusted (ber.) EBIT of EUR -4.0 million. Taking into account the restructuring measures initiated in February 2018, in particular the reduction in marketing expenses and the strong margin orientation, the results are in line with expectations on the earnings side. In order to set the course for future profitable growth in 2019 and beyond, the Group is pursuing several growth projects in the attractive Chinese market. For 2019, the Management Board continues to expect significant sales growth compared to the previous year, a further improvement in the ber. EBIT and break-even based on the ber. EBIT at the beginning of 2020.

Revenue performance in Q1 impacted by typically weaker quarter than Q4 and continued focus on margin and cost improvements in European business

In China, sales in Q1 2019 amounted to EUR 12.3 million (Q1 2018: EUR 17.5 million) and accounted for around 59% of Group sales. The Chinese market is slowly recovering from the negative effects in 2018, which led to a significant decline in sales last year. Sales in Q1 are also seasonally lower due to the Chinese New Year. For the remainder of 2019, windeln.de continues to see great growth potential and focuses on the Chinese market strategically and operationally: 1) new Chinese investors for China were attracted in Q1, 2) a second bonded warehouse in China will be launched later this year, and 3) at least one additional sales channel in China will be added. These measures are supported by recently increased order thresholds from RMB 2,000 to RMB 5,000 for products purchased through cross-border e-commerce.
The sales development in the European business DACH (Germany, Austria, Switzerland) and in the rest of Europe (RoE; Spain, Portugal and France) reflects the implementation of the Group's focus on improving profitability. Due to the reduction of the existing product portfolio, the focus on higher-margin products, the introduction of a new pricing tool and the improvement of purchasing conditions, product margins after fulfillment costs were successfully increased by around 6% in the DACH region between Q1 2018 and Q1 2019. Sales in the DACH region amounted to EUR 4.7 million in Q1 2019 (Q1 2018: EUR 7.3 million). This corresponds to around 23% of Group sales. The business in the rest of Europe, which is covered by the Bebitus shops, generated sales of EUR 3.8 million in Q1 2019 (Q1 2018: EUR 8.1 million). This corresponds to around 18% of Group sales.

Improved adjusted EBIT underscores more sustainable basis

Selling expenses decreased by 37% or EUR 4.6 million compared to the same quarter of the previous year and thus developed in line with sales. The main cost savings relate to personnel, logistics and marketing costs. The operating contribution margin (difference between gross profit and expenses for marketing and fulfillment) amounted to EUR 0.9 million in Q1 2019 (4.2% of sales). This is a small improvement of 0.1 percentage points compared to Q1 2018 (EUR 1.3 million or 4.1% of sales). This is mainly due to an increased gross profit margin of 25.1% in Q1 2019 (Q1 2018: 24.0%). About. other selling and administrative expenses (V&A expenses) decreased and in Q1 2019 were significantly below the previous year's level and stable compared to the previous quarter (Q4 2018: EUR -4.8 million).
The ber. EBIT amounted to EUR -4.0 million in Q1 2019 and improved on EUR -5.2 million in the same period of the previous year (EUR -5.9 million including the feedo Group, which has been sold in the meantime). This is a positive development in absolute terms compared to the prior-year quarter of Q1 2018, but lower than in the previous quarter of Q4 2018, which was positively impacted by sales promotions, the Christmas season and lower net working capital.

Capital increase strengthens liquidity position and supports growth strategy in China

With its entry in the commercial register on March 14, 2019, the Group successfully completed the capital increase with gross proceeds of EUR 10.1 million. The Group's available cash and cash equivalents amounted to EUR 15.5 million as of March 31, 2019.
windeln.de intends to use the proceeds of the capital increase to realize projects for the announced growth path in China and to complete the restructuring program. Two new Asian investors participated in the capital increase, actively supporting the projects with local expertise and their networks in order to improve the development of the Chinese market. In this context, two candidates, Mr. Weijian Miao and Ms. Xiao Jing Yu, are also up for election as members of the Supervisory Board at the upcoming Annual General Meeting on June 6, 2019. In addition, the Group plans to expand its local team in Shanghai to support the strategy and development of the China business.
For 2019, the Group continues to follow the restructuring path initiated in 2018 and confirms its outlook of significant revenue growth compared to 2018, a further improvement in adjusted EBIT and a moderate increase in net working capital to enable the growth of the China business. In addition, new product categories are to be developed to position windeln.de as an international company for families with young children in Europe and China. The Management Board also expects a significant improvement in the operating contribution margin (in % of sales). Break-even based on adjusted EBIT is expected in early 2020.