windeln.de with good growth and improved profitability in the second quarter
- Second quarter of 2017 reflects strategic focus on international growth, profitability improvement in Germany and implementation of operational measures
- Q2 revenue of EUR 54.6 million (H1: EUR 106.5 million); Increase of 21.6% compared to the same period of the previous year (H1: +15.8%)
- Growth drivers are china business (sales +42.6% in Q2 compared to the same period of the previous year) and European international business (+28.8%)
- Adjusted EBIT margin in Q2 of -10.5% improved year-on-year (-13.9%) and first quarter of 2017 (-14.0%)
- Negative operating cash flow of EUR -6.0 million reduced in the second quarter after EUR -7.1 million in the first quarter of 2017
Munich, August 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 54.6 million in the second quarter of 2017. Compared to the same period of the previous year, this corresponds to an increase of 21.6% (Q2 2016: EUR 44.9 million). At the same time, the Group was able to improve its profitability on the basis of the adjusted EBIT margin. This was -10.5% for the second quarter of 2017 after -13.9% in the same period of the previous year.
China and European international business with strong growth, continued earnings orientation in the DACH region
In China, sales in the second quarter of 2017 amounted to EUR 27.3 million, an increase of 42.6% compared to the same period of the previous year (Q2 2016: EUR 19.1 million). After regulatory changes led to a temporary decline in sales in the second quarter of 2016, the China business is now once again convincing with continuous growth.
In the second quarter of 2017, sales in other European countries continued the growth shown in the previous quarters and showed a revenue contribution of EUR 16.4 million and thus a growth of 28.8% compared to the previous year (Q2 2016: EUR 12.7 million). The main driver of this positive development is the increasing online market penetration in these markets.
In the DACH region, sales in the second quarter of 2017 declined by -16.1% compared to the same period of the previous year and amounted to EUR 11.0 million. This is related to the focus on margin-oriented marketing measures and the deliberate reduction of marketing expenses.
"Business in other European countries continues to develop very well, so that windeln.de increasingly stands on several resilient pillars. For the stronger earnings focus of the German business, we have been able to win Mark Henkel, founder of the online payment provider Paymill and previously at McKinsey, as head since July," explains Konstantin Urban, founder and board member of windeln.de.
Improvement in adjusted EBIT margin
The adjusted EBIT margin was -10.5% in the second quarter of 2017, after -14.0% in the first quarter of 2017 and -13.9% in the prior-year quarter.
Marketing and fulfilment costs were reduced compared to the first half of 2016 and compared to the first quarter of 2017. The key figure of the operating contribution margin (difference between gross profit and expenses for marketing and fulfilment), which is important for corporate management, developed accordingly positively and amounted to 6.4% in the second quarter of 2017 in relation to Group sales (Q2 2016: 3.4%). Other selling and administrative expenses accounted for 16.9% of Group sales in the second quarter of the year (Q2 2016: 17.3%). On a quarterly basis, windeln.de recorded a temporary increase in costs compared to the first quarter of 15.8% as a percentage of Group sales due to the burdens of preparing for the integration for Bebitus and other measures to improve operational efficiency.
Alexander Brand, founder and board member of windeln.de, comments: "Sustainable profitable development continues to be our top priority. That is why we are currently pushing ahead with the integration of Bebitus and the planning for the relocation of our central warehouse from Berlin to Eastern Europe."
Adjusted EBIT in the German Shop segment, which comprises the activities for China and the German market, amounted to a margin of 3.1% in the second quarter of 2017, significantly higher than in the previous year (Q2 2016: 0.3%) and also in the first quarter of 2017 (Q1 2017: -3.3%). The strong Business in China and the focus on profitability in the German-speaking region, which began in the first quarter of 2017, made a decisive contribution to this.
Adjusted EBIT in the International Shops segment, which comprises activities in other European countries (Feedo, Bebitus, pannolini.it and windeln.ch), amounted to a margin of -15.5% in the second quarter of 2017, significantly higher than in the previous year (Q2 2016: -22.2%).
Reduced cash outflow
As of June 30, 2017, net working capital amounted to approximately EUR 4.3 million after approximately EUR 6.7 million as of March 31, 2017. The improvement is attributable to a reduction in inventory and a higher stock of trade payables. At EUR -6.0 million, operating cash flow was lower than in the first quarter (EUR -7.1 million). Cash and cash equivalents (including time deposits and cash with limited disposal) of the windeln.de Group amounted to EUR 42 million at the end of the first half of 2017.
CFO and Executive Board member Dr. Nikolaus Weinberger: "The development in the second quarter shows that we are on the right track to reach break-even on the basis of adjusted EBIT in the course of 2019. The steps taken so far to improve cost and margin positions are gradually showing their effect. Further measures are being implemented."
The semi-annual report and the presentation for analysts and investors are available on the windeln.de Investor Relations website (https://corporate.windeln.de/de/interim-reports-de).
Selected key figures for the first half of 2017 and the second quarter of 2017 (excluding the discontinued Shopping Clubs division)
|SALES BY REGION||H1 2017||H1 2016||Q2 2017||Q2 2016|
|Revenue (million euros)||106,5||91,9||54,6||44,9|
|SEGMENT REPORTING||H1 2017||H1 2016||Q2 2017||Q2 2016|
|Revenue (million euros)||106,5||91,9||54,6||44,9|
|Contribution margin (million euros)||4,5||2,8||3,5||1,5|
|in % of turnover||4,2%||3,1%||6,4%||3,4%|
|Adjusted EBIT (EUR million)||-13,0||-12,7||-5,7||-6,3|
|in % of turnover||-12,2%||-13,8%||-10,5%||-13,9%|
|in % of turnover||0,0%||-0,2%||3,1%||0,3%|
|in % of turnover||-14,9%||-22,9%||-15,5%||-22,2%|
|Reconciliation to Group EBIT||-7,8||-6,6||-4,1||-3,3|