windeln.de with 9% revenue growth and improved EBIT in 2017
- For the first time, sales exceeded EUR 200 million (EUR 211.9 million) in 2017 (+8.8% growth compared to the previous year); 52.5 million Euro turnover in the 4. Quarter 2017
- Improved adjusted EBIT of EUR -24.9 million (margin -11.8%) in 2017 compared to EUR -26.7 million (margin -13.7%) in 2016; -EUR 6.5 million adjusted EBIT in the 4th year. Quarter 2017
- Net liquidity of EUR 25.7 million as of December 31, 2017, strengthened by capital increase of EUR 5.2 million in February 2018
- Break-even based on adjusted EBIT is expected to be achieved at the beginning of 2019 through the efficiency and profitability measures initiated in February
Munich, March 14, 2018: windeln.de SE, one of the leading online retailers for baby and toddler products in Europe and for customers in China, generated sales revenues of EUR 211.9 million in 2017, an increase of +8.8% compared to the previous year (2016: EUR 194.8 million). In addition, the Group achieved an improved adjusted EBIT of EUR -24.9 million (-11.8% margin) in 2017 compared to EUR -26.7 million (-13.7% margin) in the previous year. With sales of EUR 52.5 million in the fourth quarter, sales in 2017 were -8.1% below the previous year's figure, which is attributable to the continued focus on profitability, temporary integration effects at Bebitus and a high sales base in the China region in the previous year. Adjusted EBIT improved from EUR -7.4 million (-13.3% margin) in the fourth quarter of 2016 to EUR -6.5 million (-12.4% margin) in the fourth quarter of 2017.
China and Europe with solid sales growth; DACH lower due to reduction in marketing expenses
In 2017, sales with Chinese customers rose to EUR 105.6 million (+18.2% compared to the previous year) and thus accounted for around 50% of Group sales. Business on the Tmall Global platform in particular developed strongly. With sales of EUR 27.9 million in the fourth quarter of 2017, growth (+1.4%) was lower than in the previous year due to the particularly strong fourth quarter of the previous year.
Sales in the DACH region (Germany, Austria and Switzerland) fell to EUR 44.2 million in 2017 (-18.9% compared to the previous year), which is attributable to the profitability focus and reduced marketing expenses (-50% marketing expenses compared to the previous year) and accounted for around 21% of Group sales. Sales in the fourth quarter of 2017 amounted to EUR 10.0 million (-35.8% compared to the previous year).
"In order to improve profitability in Germany, we have deliberately cut unprofitable sales. But we want to grow again in our home market in the medium term and are convinced that we can achieve this with the right products, content and services," explains Jürgen Vedie, COO and member of the Executive Board.
Around 29% of Group sales in 2017 were attributable to the European region outside DACH with sales of EUR 62.3 million and growth of +22.2% compared to the previous year. Sales in the fourth quarter of 2017 amounted to EUR 14.6 million (+3.9% compared to the
previous year). As of October 1, 2017, the Bebitus business in Spain, Portugal and France was fully integrated into the Group, resulting in temporarily lower sales in the fourth quarter of 2017. The integration of Bebitus was a key project of the Group in 2017 and will drive the improvement of efficiency in the future.
Improvement in adjusted EBIT margin
In 2017, adjusted EBIT improved to EUR -24.9 million and -11.8% margin compared to EUR -26.7 million (-13.7% margin) in the previous year. The adjustments to the EBIT for 2017 in the amount of EUR 18.6 million mainly include share-based payments in connection with the earn-out agreements for previous acquisitions (EUR 7.7 million) and the impairment of intangible assets (EUR 10.3 million). Expenses for fulfillment and marketing were reduced. The adjusted fulfillment cost ratio was 14.7% in 2017 compared to 17.4% in 2016, the marketing cost ratio was 5.3% in 2017 compared to 7.0% in 2016. The operating contribution margin (gross profit margin less marketing and fulfillment costs), an important indicator for the Group, increased significantly in the financial year to EUR 10.1 million (4.8% of sales) compared to the previous year's level of EUR 4.6 million (2.4% of sales). Adjusted other selling and administrative expenses amounted to EUR 35.1 million (16.5% of sales) and will be significantly reduced by the implementation of the recently initiated efficiency and profitability measures.
Net liquidity amounted to EUR 25.7 million at the end of the 2017 financial year (EUR 29.2 million including credit lines drawn down of EUR 3.5 million). The capital increase carried out at the beginning of February 2018 raised additional funds of EUR 5.2 million. The participation of new and existing shareholders as well as the entire Executive Board in the capital increase reflects confidence in the Group's new strategic orientation.
Recently initiated efficiency and profitability measures to achieve break-even at the beginning of 2019
In the course of the upcoming change of Management Board, the management subjected the windeln.de businesses to a thorough review and initiated several measures to increase efficiency and reduce costs on February 6, 2018. The measures initiated include (i) the reorganization of the company and reduction of costs at the headquarters in Germany and (ii) the focus of international activities on regions with short- to medium-term profitability potential.
For 2018, management expects revenue growth to be at the level of 2017. For 2018, the Group expects a significant improvement in the operating contribution margin, adjusted EBIT margin and free cash flow. Break-even based on adjusted EBIT is expected to be reached in early 2019.
CFO Dr. Nikolaus Weinberger summarizes: "2017 was a challenging year for our company, but we made good progress in several areas and increased our operating contribution margin. In order to secure further profitability progress in 2018 and to reach break-even on the basis of adjusted EBIT at the beginning of 2019, we have already announced further measures to streamline and reduce costs this year. We have already made very good progress on a number of measures."
Selected key figures for the 2017 financial year and the fourth quarter of 2017
|2017||2016||Q4 2017||Q4 2016|
|Revenue (million euros)||211,9||194,8||52,5||57,1|
|Contribution margin (million euros)||10,1||4,6||2,4||1,1|
|in % of turnover||4,8%||2,4%||4,7%||2,0%|
|Adjusted EBIT (EUR million)||-24,9||-26,7||-6,5||-7,4|
|in % of turnover||-11,8%||-13,7%||-12,4%||-12,9%|