windeln.de posts 21% revenue growth in fiscal year 2016; Q4 improved
- Final quarter revenues of EUR 57.1 million the highest since the company’s foundation and improved profitability compared to the third quarter
- European operations outside Germany as growth drivers: Revenue contribution from International Shops more than doubled
- Latest outlook for 2016 fulfilled: revenues of EUR 194.8 million, gross profit margin of 26.6% and adjusted EBIT margin at -13.7%
- Adjusted EBIT expected to break even in the course of 2019
Munich, March 15, 2017 - windeln.de SE, the leading online retailer for baby and toddler
European operations outside of Germany with strong growth contribution
Around 71% of total revenues in 2016 were attributable to the segment German Shop, which also includes the China business. Revenues here reached the previous year’s level at EUR 139.0 million. This was achieved despite regulatory changes in the second quarter for cross-border e-commerce business to China and the implementation of a new ERP system in 2016, which had led to sales losses. After the Chinese business recovered in the third quarter, business in China continued to gain momentum in the final quarter. Sales to Chinese customers reached EUR 27.5 million in the fourth quarter of 201
“The regulatory change in China and the introduction of a new ERP system made 2016 a difficult financial year for us. We are therefore not satisfied with 2016. However, the positive developments in the second half of 2016 show us that we are on the right track to improving our customers’ shopping experience, to continually increasing our revenues and to creating efficient cost structures,” explains Alexander Brand, co-founder and Management Board member of windeln.de.
Implemented strategic and operational measures already taking some effect
The company is making good progress implementing the measures defined by the STAR program to promote revenues growth and improve profitability. Significant steps taken in fiscal year 2016 include opening the Tmall global shop, discontinuing the Shopping Clubs segment, relaunching Nakiki as ready-to-ship online shop and outsourcing customer service. At the same time, the measures implemented, such as the reduction of the number of brands, had an impact on sales. The gross profit margin in the fourth quarter of 23.6% was lower due to Christmas business promotions in China and costs associated
Adjusted EBIT of EUR -26.7 million for continuing operations (2015: EUR -9.3 million) reflected European expansion, the regulatory change in China and the introduction of the new ERP system. The adjusted EBIT margin amounted to -13.7%. The adjusted EBIT margin in the fourth quarter managed to improve on the three preceding quarters to -12.9%. This was achieved by lower fulfilment costs, lower marketing and lower other SG&A costs as percentage of revenues.
Konstantin Urban, co-founder and management board member of windeln.de, explains: “We achieved important milestones in the further development of windeln.de in 2016. Discontinuing our Shopping Club business and focusing on our business model is now behind us. With the relaunch of Nakiki as online shop, we were able to expand our target audience to families with older children through select products, especially in the areas of children’s clothes and toys.” One- time expenses of around EUR 2 million in connection with discontinuing the Shopping Club were in the realm of expectation.
Net working capital strongly improved over the previous year, amounting to around EUR 6.6 million (2015: EUR 11.4 million) on December 31, 2016. This was primarily due to inventory reduction in the third quarter of 2016, also in connection with discontinuing the Shopping Club segment. As of December 31, 2016, windeln.de’s cash and cash equivalents (including time deposits) amounted to around EUR 56 million plus a borrowing base financing line.
Break-even expected in the course of fiscal year 2019
For 2017, the company is striving for a moderate double-digit increase in revenues. At the same time, special focus is being given to increasing profitability, supported by both the scale effects of revenues growth and the cost-cutting measures already initiated. The Group therefore expects a moderate improvement in the operating contribution margin and adjusted EBIT as a percentage of revenues, although the full effects of the measures implemented will not materialize until 2018. CFO Dr. Nikolaus Weinberger summarizes the medium-term goals as follows: “In an e-commerce market that is con
Select key figures for fiscal year 2016 and for the fourth quarter of 2016 (excluding the discontinued Shopping Club segment)
|2016||2015||Q4 2016||Q4 2015|
|Revenues (EUR million)||194.8||161.0||57.1||55.1|
|German Shop (EUR million)||139.0||140.3||41.7||43.1|
|International Shops (EUR million)||55.9||20.7||15.5||12.0|
|Adjusted EBIT (EUR million)||-26.7||-9.3||-7.4||-3.9|
|in % of revenues||-13.7%||-5.8%||-12.9%||-7.1%|
|in % of revenues||-1.2%||4.0%||-1.8%||4.1%|
|in % of revenues||-20.5%||-26.0%||-18.8%||-22.9%|
|Reconciliation to Group EBIT||-13.7||-9.5||-3.8||-3.0|
Discontinued Shopping Clubs business segment
|2016||2015*||Q4 2016||Q4 2015*|
|Revenues (EUR million)||14.8||17.6||0.1||5.2|
|Contribution to EBIT (EUR million)**||-7.5||-6.7||-0.3||-2.2|
|in % of revenues||-50.6%||-37.8%||-416.4%||-41.9%|