fashionette remains one of the fastest growing eCommerce pure-plays, having grown sales by 4% yoy in Q1 organically. The number of active customers exceeded the 1m mark for the first time to a new record high of 1.08m. This has been achieved despite lower marketing spending with CAC improving by 21% yoy to EUR 27.50, thanks to a more focused marketing approach with a high share of online marketing. This already demonstrates the handwriting of the new management team around CEO Dominik Benner, who should not only continue to focus on profitable growth but also execute a promising platform transition at fashionette.

This explains why fashionette confirmed its FY23 guidance of 5-8% net revenue growth yoy to € 173-178m (eNuW: € 176m, eCons: € 177m) already including a negative low double-digit €m effect from the discontinuation of beauty and smartwatches. In Q2-Q4, this requires a growth pick-up, which should be driven by the platform transition in H2. Adj. EBITDA is expected in the range of € 2-3m (eNuW: € 2.8m, eCons: € 3.0m), implying a margin of 1.4% at mid-point. This represents an improvement of c. 1.2pp yoy despite one-off restructuring expenses to the tune of € 1.8-2.8m. Management identified cost savings in marketing and admin functions (i.e. personnel), which should yield first positive results in H2.

Against this backdrop, the recent share price underperformance compared to peers looks unjustified. While eCom stocks have bounced back, fashionette is still trading at 0.6x book value (0.8x ex goodwill) despite generating solid organic growth this year and being slightly profitable on adj. EBITDA. An impairment of the goodwill related to Brandfield (€ 11m) looks unlikely at this stage given that Brandfield’s operating performance is still robust.

CEO Benner confirmed the ambition to transform fashionette into a true luxury eCommerce platform in the mid-term. In August 2023, first B2B partners will be connected to the ecosystem and the number should rise to 150 until year-end. fashionette will also start to distribute luxury fashion (i.e. clothing). Operating online platforms across 16 verticals, fashionette should strongly benefit from cross-selling opportunities as well as The Platform Group’s know-how regarding tech, data, marketing and logistics.

BUY with an unchanged PT of € 21.00, based on DCF.