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Original-Research: Westwing Group SE - from NuWays AG

04.08.2025 / 09:00 CET/CEST

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Classification of NuWays AG to Westwing Group SE

Company Name: Westwing Group SE

ISIN: DE000A2N4H07

Reason for the research: Update

Recommendation: Buy

from: 04.08.2025

Target price: EUR 18.00

Target price on sight of: 12 months

Last rating change:

Analyst: Henry Wendisch

Q2 preview: Modest sales but margins to trend up

WEW releases Q2 results on Thursday, August 7th, here's what we expect:

Declining GMV and top-line should be no surprise. WEW started to change its

product assortment and shift its offering more towards the Westwing

Collection. This naturally comes with a hit on GMV and sales which should

therefore not be a surprise. Consequently, Q2 GMV is seen at EUR 110m (-4%

yoy) as a result of lower active customers (eNuW: -6% yoy), thus lower

orders (eNuW:-17% yoy), but mitigated by a rising average basket size (+16%

yoy). Accordingly, sales should arrive at EUR 101m (-5% yoy). More

specifically, the assortment change (and the consequent sales decline) is

seen to be more pronounced in the International segment (eNuW: EUR 42m sales,

-9% yoy), whereas DACH should stay relatively stable (eNuW: EUR 59m sales, -1%

yoy), as DACH's product assortment is already more global and premium.

Rising share of own products as gross margin driver. As a direct result of

the assortment change, the share of the own products called "Westwing

Collection" is seen to further expedite to 63% (+10pp yoy and +1pp qoq),

according to our estimates. This implies a GMV growth of the Westwing

Collection of 15% yoy to EUR 69m, whereas third party products' GMV should

decrease by 24% yoy to EUR 41m, in our view. This development bodes extremely

well for WEW, as we estimate the Westwing Collection to yield gross margins

of 57% (vs. third party products of 43%). In sum, we expect the gross margin

to rise by 0.6pp yoy to 51.2%, which should nevertheless result in a decline

in gross profit to EUR 52m (-3% yoy) due to lower sales.

Rising margins across the board. The positive gross margin effect described

above adds to ongoing efficiency gains in fulfilment. Here, we expect the

fulfilment expense ratio to continue its decline by 1pp yoy to 19.1% of

sales. This implies a total rise in contribution margin by 1.6pp yoy to

32.1% in Q2. On an absolute level, the contribution profit should therefore

remain flat despite the sales decline. Further down the P&L, adj. EBITDA is

actually seen to rise from low levels by 36% yoy to EUR 4.6m (5.2% margin, up

1.6pp yoy) on the back of conservative marketing expenses, a reduced

headcount and flat overhead costs.

Negative FCF expected due to inventory ramp for country expansions.

Following a negative FCF in Q1 of EUR -8.9m, mainly due to a ramp-up in

inventory ahead of country expansions, we expect a similar effect in Q2, but

much less pronounced. Operating CF is seen to arrive nearly break-even at EUR

-1m (which includes an expected EUR -2m of negative WC effect, mainly

inventory) and with another EUR 1.4m of investments, we expect a FCF of EUR

-2.4m in Q2 (H1'25e: EUR -11.3m). However, throughout H2, we expect a gradual

inventory sell down which should lead to an overall positive FCF of EUR 12.3m

for FY'25e v.

In sum, WEW is poised for profitable growth as early as FY'26e, is therefore

a clear BUY and part of our AlphaList with an unchanged PT of EUR 18.00, based

on DCF.

You can download the research here:

https://eqs-cockpit.com/c/fncls.ssp?u=efea4bdb41e75f1af633004c22216f1c

For additional information visit our website:

https://www.nuways-ag.com/research-feed

Contact for questions:

NuWays AG - Equity Research

Web: www.nuways-ag.com

Email: research@nuways-ag.com

LinkedIn: https://www.linkedin.com/company/nuwaysag

Adresse: Mittelweg 16-17, 20148 Hamburg, Germany

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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss

bestimmter Börsengeschäfte.

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

analysierten Unternehmen befinden sich in der vollständigen Analyse.

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