• Final quarter with EUR 57.1 million strongest turnover since foundation and improved profitability compared to the third quarter
• Activities in other European countries as growth drivers: Revenue contribution from the International Shops segment more than doubled
• Previously communicated outlook for 2016 met: sales of EUR 194.8 million, gross profit margin of 26.6% and adjusted EBIT margin -13.7%
• Adjusted EBIT break-even expected in the course of 2019

Munich, 15 March 2017. windeln.de SE, the leading online retailer for baby and toddler products in Europe and for customers in China, achieved sales growth of 21% year-on-year to EUR 194.8 million in the 2016 financial year with its continuing operations (i.e. excluding the discontinued Shopping Clubs segment) (2015: EUR 161.0 million). At EUR 57.1 million from continuing operations (up 25% compared to the third quarter), the fourth quarter of 2016 was the quarter with the highest turnover since the company was founded. This positive sales development can be attributed to a good Christmas business. At the same time, windeln.de succeeded in significantly expanding its base of active customers over the course of the year. As of December 31, 2016, the Group had approximately 1.07 million active customers, an increase of around 24% compared to the previous year.

European foreign activities with a strong contribution to growth

Overall, the German Shop segment, which also includes business in China, accounted for around 71% of sales in 2016. At EUR 139.0 million, this achieved sales at the previous year's level. This was achieved despite regulatory changes for the cross-border ECommerce business to China in the second quarter and the ERP implementation completed in 2016, which led to sales losses. After a recovery of business in China in the third quarter, it gained further momentum in the final quarter. Revenue from Chinese customers amounted to EUR 27.5 million in the fourth quarter of 2016, an increase of 31% compared to the previous quarter. The fourth quarter therefore made a significant contribution to the fact that windeln.de in China achieved sales at the previous year's level on an annual basis. The revenue contribution of the International Shops segment, which includes activities in other European countries (feedo, bebitus, pannolini.it and windeln.ch), more than doubled to EUR 55.9 million. This means that 29% of Sales at Group level already came from European countries, compared with 13% in the previous year.
"The 2016 financial year was difficult for us due to the regulatory change in China and the ERP implementation. We ourselves are not satisfied with 2016. However, the positive developments in the second half of 2016 show us that we are on the right track to improve our customers' shopping experience, continuously increase our sales and create efficient cost structures," explains Alexander Brand, co-founder and board member of windeln.de.

Implemented strategic and operational measures are already having an initial effect

The company is making good progress with the implementation of the measures defined under the STAR program to promote revenue growth and improve profitability. Key steps in the 2016 financial year include the opening of the Tmall Global Shop, the abandonment of the Shopping Clubs business unit and the relaunch of Nakiki as a ready-to-ship online shop and the outsourcing of customer service. At the same time, implemented measures such as the reduction in the number of brands weighed on the sales side. The gross profit margin was also lower in the fourth quarter at 23.6% due to the Christmas business, promotions in China and project costs in purchasing. Gross profit from sales in continuing operations increased by 22% year-on-year to EUR 51.8 million. The gross profit margin of 26.6% increased slightly compared to the previous year's figure of 26.5%, although the acquired businesses of feedo and bebitus, which were still weaker in margins, were fully consolidated for the first time.
The European expansion, the change in regulation in China and the introduction of ERP are reflected in adjusted EBIT of EUR -26.7 million for continuing operations (2015: EUR -9.3 million). The adjusted EBIT margin amounted to -13.7%. The adjusted EBIT margin in the fourth quarter improved by -12.9% compared to the three previous quarters. This was achieved through lower percentage fulfilment costs as well as lower marketing and other sales and administrative costs.
Konstantin Urban, co-founder and board member of windeln.de, explains: "In 2016, we achieved important milestones in the further development of windeln.de. The abandonment of the Shopping Clubs business and the associated focus of our business model has been completed. With the relaunch of Nakiki, we can expand our target group to families with growing children through selected products especially in the areas of children's clothing and toys." The abandonment of the Shopping Club was associated with one-off expenses of around EUR 2 million and is therefore in line with expectations.
On December 31, 2016, net working capital, which improved sharply year-on-year, amounted to approximately EUR 6.6 million (2015: EUR 11.4 million). This was primarily due to the reduction in inventories in the third quarter of 2016, also in connection with the abandonment of the Shopping Clubs business segment. As of December 31, 2016, windeln.de had cash and cash equivalents (including term deposits) of approximately EUR 56 million plus a borrowing base financing line.

Break-even expected in the course of the 2019 financial year

For the 2017 financial year, the company is aiming for moderate double-digit sales growth. At the same time, special focus is placed on increasing profitability, which is supported both by economies of scale from the targeted sales growth and by measures already initiated to reduce costs. The Group therefore anticipates a moderate improvement in the operating contribution margin and adjusted EBIT as a percentage of sales, although the full effects of the measures taken will largely not materialize until 2018. CFO Dr. Nikolaus Weinberger summarizes the medium-term goals as follows: "In a growing e-commerce market, we are planning with an average annual sales growth of at least 15%. We are pursuing the clear goal of achieving break-even in the course of 2019 on the basis of adjusted EBIT."