Westwing released solid preliminary Q4’23 results, indicating that Q4 GMV was up 4% yoy to € 147m (+37.4% qoq), implying a robust FY’23 GMV of € 481m (flat yoy). As in the past, revenue de­velopment will be slightly below GMV development and should increase by 0.4% yoy to € 129m for Q4’23 and slightly decrease (-1% yoy) to € 427m for FY’23 (eNuW: € 438m, eCons: € 433m). Importantly, for the second consecutive quarter, the number of active customers has grown: +1% qoq to 1.28m with a healthy average GMV per customer of € 377 (+4% yoy) for the full year.

The company is on track to deliver its fifth profitable quarter in a row as management expects to have reached the upper end of the already raised adj. EBITDA guidance of € 13m to € 19m (eNuW: € 20m, eCons: € 14.2m. Above all, this should have been carried by the continued strong expansion of its private label share: +6pps yoy to 47% of GMV

The adjusted EBITDA margin is seen to have risen by 4-5.5pps to 3-4.5%, respectively (eNuW: 4.7%, eCons: 3.3%). Aided by a strong adj. EBITDA development as well as lower inventory levels, Westwing is on track to generate positive free cash flow in both Q4’23 and FY’23, further increasing its considerable net cash position to € ~75m (eNuW), which should protect the stock’s downside.

Importantly, this preliminary release underpins that the company has been able to return to sustainable top and bottom line growth in H2‘23 despite a very challeng­ing macroeconomic environment for the Home & Living market. Moreover, the continued growth in the number of active customers and a healthy basket size development indicate that a positive inflection point has been reached. Given that efficiency measures have been successfully implemented along with a ris­ing private label share, the company is not only seen to deliver its full year 2023 guidance, but also of­fers a compelling mix of growth and value as we head into 2024, in our view.

Trading at only ~0.2x EV/Sales FY23e (~60% discount to e-commerce peers), we reiterate our BUY rating with an unchanged PT € 19.00, based on DCF.