windeln.de with focus on structural improvements in the first quarter of 2017
- First quarter of 2017 with sales of EUR 51.9 million
- "International Shops" segment growth driver with 35.6% increase in sales compared to the same period of the previous year, China sales also increased
- New shop system for German shop and strong focus on earnings; Customer service successfully relocated
- Profitability based on adjusted EBIT at the same level compared to the first quarter of 2016, strong improvement in the International Shops segment
- Negative operating cash flow of EUR -7.1 million in the first quarter after EUR -9.6 million in the fourth quarter of 2016
Munich, May 9, 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 51.9 million in the first quarter of 2017. Compared to the same period of the previous year, this corresponds to an increase of 10.3% (Q1 2016: EUR 47.0 million).
International growth trend continues, earnings focus in Germany
Revenue in the German Shop segment, which includes sales to Chinese customers, amounted to EUR 35.3 million in the first three months (Q1 2016: EUR 34.8 million).
The China sales included therein increased by 8.6% compared to the first quarter of 2016 to EUR 23.6 million. Due to the strong year-end business, China sales in the first quarter of 2017 are lower compared to the fourth quarter of 2016, as in previous years. This is similar to Europe. In order to improve service for customers in China and reduce costs, windeln.de has also been working with the Dutch shipping service provider PostNL since the end of the first quarter. Furthermore, the Unionpay payment method, which is very popular in Asia, was introduced and a separate office was opened in Shanghai. "The physical presence on site offers us a variety of advantages: We are closer to our customers and can monitor developments and our competition more closely. Overall, I see us in China on the right track. This is also evidenced by the award of windeln.de as the most popular foreign brand, which was awarded to us at the Alibaba Group's Tmall Global Award Ceremony in April," says Konstantin Urban, founder and board member of windeln.de.
Sales for the DACH region amounted to EUR 13.3 million in the first three months (Q1 2016: EUR 14.3 million), which corresponds to a reduction of 6.6%. The reason for this is the focus on profitability and the reduction in products made in 2016 as well as lower marketing expenses (Q1 2017: EUR 1.3 million compared to EUR 1.8 million in Q1 2016, which corresponds to a reduction of -24%). In the first quarter, the German online shop was also converted to the group-wide, new IT shop system, which enables customers to use an optimized shop regardless of the end device windeln.de via responsive design. The standardization of the shop system leads to sustainable efficiency advantages within windeln.de. Konstantin Urban continues: "We have significantly further developed the shop infrastructure and product range in our German-speaking home market. Focusing on profitability is our top priority. For example, we have completely relocated our customer service to Hungary and introduced the additional private label Avani to the market." In Q1 2017, however, the relocation of customer service from Germany to Hungary led to additional costs, as customer service in Germany was operated in parallel until the end of April 2017 in order to minimize possible migration risks.
At EUR 16.6 million, the revenue contribution of the International Shops segment, which includes activities in other European countries (feedo, bebitus, pannolini.it and windeln.ch), continued to increase significantly by 35.6% compared to the same period of the previous year (Q1 2016: EUR 12.2 million). This means that 32% of Group-level sales came from European countries, after 27% in the fourth quarter of 2016 and 26% in the first three months of 2016. Alexander Brand, founder and board member of windeln.de: "We are very satisfied with the sales and margin development of our international European business. We are also making good progress in terms of integration."
Adjusted EBIT margin at a similar level to Q1 2016
Adjusted EBIT amounted to EUR -7.2 million in the first quarter of 2017, the adjusted EBIT margin was EUR -14.0% after -13.8% in the same period of the previous year. It should be emphasized that the International Shops segment in particular also developed very well in terms of earnings. A structural improvement can also be seen in the reduction of other selling and administrative expenses in the Group despite the additional expenses for the temporary parallel operation of customer service. These amounted to 15.8% as a percentage of Group sales, compared with 16.5% in the first quarter of 2016. A higher share of low-margin consumer goods products led to lower gross profit margins, which were partially offset by lower marketing and fulfilment costs. The key figure of the operating contribution margin (difference between gross profit and expenses for marketing and fulfilment), which is important for corporate management, remains constant in the first quarter of 2017 compared to the fourth quarter of 2016 at 1.9% in relation to Group sales (Q1 2016: 2.8%).
Net working capital, which improved sharply year-on-year, amounted to approximately EUR 6.7 million as of March 31, 2017 (Q1 2016: EUR 15.1 million). This was primarily due to the reduction in inventories in the course of 2016, which is closely linked to the abandonment of the Shopping Clubs business segment. Cash and cash equivalents (including time deposits) of the windeln.de amounted to around EUR 48 million as of March 31, 2017.
CFO Dr. Nikolaus Weinberger explains: "The development of adjusted EBIT in the first quarter is in line with our expectations. We are in the process of implementing the measures announced last year to improve cost and margin positions. We are making good progress and will achieve positive effects over time. We are focused on our goal of breaking even on the basis of adjusted EBIT in the course of 2019."