DGAP-News: home24 SE / Key word(s): Preliminary Results
home24 achieves strong revenue growth of 18% in the full year 2018
Berlin, 13 February 2019 - home24 SE ("home24", "the Company") grew by 18% on a currency-adjusted basis year-on-year in the full year 2018 with revenues of EUR 313 million, based on preliminary FY financials. As announced, the Company thus significantly outperformed the online furniture market, which only grew by c. 10% in the home24 geographies in 2018. In Q4 2018, home24 increased its currency-adjusted revenue by 19% to EUR 92 million year-on-year, with partial shift of revenue recognition to Q1 2019. This shift is reflected in an adjusted EBITDA margin for the full year 2018 of c. -13%, which was also affected by the lack of operating leverage caused by the weak demand in EU during April to October 2018 and key investment ramp-up. Brazil was the first region to be profitable on adjusted EBITDA margin basis for the full year 2018, at c. 1%, on the back of significant growth.
The total furniture market in the home24 geographies grew by only c. 1% in 2018, with the offline market even declining in some countries year-on-year, while the online market grew by c. 10%. A decisive reason for this weakened growth was the unusually hot and long summer in our core markets. This development was also reflected in the performance of our share after going public on 15 June 2018, in addition to a challenging market environment for technology shares. Continued marketing investments enabled home24 to partially offset the weather-related weakness in demand to gain market share and continue its growth course. The changeover to a new ERP system caused temporarily higher handling and personnel costs in the past year and thus also impacted earnings. However, due to its scalability and efficiency, the new system is one of the key catalysts of future growth.
Around the Black Friday shopping event at the end of November 2018, home24 reported the most successful week in the Company's history. At the same time, the high level of incoming orders not fulfilled from stock meant revenue recognition was partially shifted to Q1 2019.
"The fact, that we further increased our market share in a difficult environment in Europe and strengthened brand awareness, while breaking even in Brazil for the full year on the back of significant growth, is proof of the strength of our business model," says Marc Appelhoff, Co-CEO of home24.
On the Path to Profitability
In 2019, efficiency gains from investments already initiated as well as new initiatives for customer acquisition and cost reduction will pave the way to profitability. Following the full commissioning of the new EU logistics facility in Halle planned for Q2 2019, the warehouse capacity will increase by more than 60% in Europe, which will enable orders to be processed even more swiftly and efficiently in the future. The first shipping of products from the new facility is scheduled for February 2019. An additional logistics facility is also planned to be opened in Brazil in the second half of the year to support the sustained strong growth.
In Germany, home24 will open further outlets in Cologne and Hanover in the first half of 2019 to complement a regional outlet hub strategy. This is a consistent continuation of the successful outlet strategy, which enables decentralized reselling of returned goods to improve cost efficiency.
Progress in automation, including logistics and customer service, will help improve customer satisfaction and reduce costs in 2019. Marketing improvements are primarily planned in a more precise targeting of potential customers and personalizing the shopping experience to reduce customer acquisition costs and increase repeat purchases.
Compared to other market participants, home24 successfully builds its assortment differentiation on a high share of private label products. During 2019, the Company intends to expand its private label offering in order to convince even more customers to buy furniture online at home24.
"We strive to reach important milestones in 2019 in order to further expand home24's position as the first destination for online home & living in continental Europe and Brazil," says Marc Appelhoff, Co-CEO of home24. "This includes the opening of new logistics facilities, thoughtful expansion of our product range as well as numerous technological innovations to improve the shopping experience of our customers."
home24 confirms its outlook for 2019: revenue growth in 2019 at or above the growth rates of 2018 and break even at the end of 2019 on adjusted EBITDA basis.
This publication contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the Company's management. Forward-looking statements contain no guarantee for the occurrence of future results and developments and are associated with known and unknown risks and uncertainties. Due to various factors, actual future results, developments and events may differ materially from those described in these statements; neither the Company nor any other person accepts any responsibility whatsoever for the accuracy of the opinions or underlying assumptions contained in this publication. The Company assumes no obligation to update the forward-looking statements contained in this publication.
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