Original-Research: Westwing Group SE (von NuWays AG): BUY

Classification of NuWays AG to Westwing Group SE

Company Name:	Westwing Group SE
ISIN:	DE000A2N4H07
Reason for the research:	Update
Recommendation:	BUY
from:	09.05.2025
Target price:	EUR 18.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Henry Wendisch

Q1 according to plan: margins up, top line to follow

Flat top line as anticipated due to strategic assortment change. GMV went down 5% yoy to € 119m and sales decreased by 1% yoy to € 108m (eNuW: 109m), mainly due to WEW’s strategy shift towards a more premium product assortment. Here, WEW phases out lower margin items and thus also a certain part of their customer group in exchange for a more premium product offering, which becomes visible in (1) an 11pp yoy higher private label share of 62%, (2) a decline in active customers by 6% yoy, (3) a subsequent lower number of orders (-25% yoy) but also (4) in an expanding average basket size (+28% yoy). This strategy shift started in H2’24 and the subsequent effects seen above should therefore bottom out in H2’25e. Moreover, this shift was more pronounced in WEW’s International segment (sales: -3.5% yoy), whereas the DACH segment showed sales growth of 1% yoy, in line with market growth (Home & Living DACH: +2% yoy).

Margins up notably. Adj. EBITDA rose by 44% yoy to € 9.1m, a 2.7pp yoy higher margin of 8.5%, thanks to interaction of several effects: (1) the higher private label share drove up gross margin by 0.2pp yoy to 51.5%, a stronger margin increase was counteracted by higher container costs, (2) efficiency gains in fulfillment visible in a 0.9pp yoy lower fulfillment ratio, (3) the phase out of last year’s brand awareness and subsequent lower marketing costs led to a 0.9pp yoy lower marketing ratio and (4) lower overhead costs with G&A expense ratio down 1.4pp yoy.

Looking ahead, the product assortment change is seen to show similar top-line effects in Q2 and partly still in Q3, thus making FY’25e a transitional year. However, in FY’26e sales momentum is seen to pick up again (eNuW: +10% yoy) driven by more active customers due to country expansions (LUX, DK and SWE completed, 7 more to come) coupled with higher average basket sizes thanks to the assortment change. Naturally, this should come with positive operating leverage and efficiency gains, which should drive margins and cash generation in FY’26e accordingly.

Against this backdrop, WEW’s shares seem mispriced, in our view, trading at 17% FCFY’25e (28% ’26e). The anticipated return to growth coupled with further margin expansions in FY'26e could trigger a rerating soon. Therefore, we confirm our BUY recommendation with an unchanged PT of € 18.00, based on DCF.

You can download the research here: http://www.more-ir.de/d/32528.pdf
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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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