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Ceconomy’s Q2 performance was slightly ahead of market expectations. The group’s lfl sales improved 18% yoy, benefitting from a gradual lifting of COVID related restrictions. While the momentum continued in April 2022, we take a more cautious stance about the times ahead, considering the inflationary headwinds in areas like consumer demand and the supply chain. This is despite the estimation of a higher sale contribution from the brick & mortar format. We will trim our financial estimates but ma
Companies: CECONOMY AG
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Ceconomy’s Q1 performance was slightly below our expectations. This was mainly attributable to COVID-19-led restrictions (especially in the DACH region), supply-related disruptions and a cyber-attack in November (we see it as a one-off). However, the retailer’s exit rate has been quite encouraging and the trading conditions are also likely to improve gradually. We concur with the management’s outlook for FY21/22. While DACH needs to be overhauled better, the other issues are non-structural in na
Ceconomy’s Q4 trading performance was in line with our expectations. Lfl sales slumped 1.2% on the back of a tough comparable base. We expect the company to gain further strength in the forecast years, especially on its domestic turf ‘Germany’. Overall, the adjusted profit should grow ahead of the top-line momentum. We maintain our optimistic stance on the stock’s valuation.
Ceconomy’s trading statement for Q3 FY20/21 was a mixed bag – revenue was stronger but the adjusted EBIT was weaker than our expectations. Much of it was attributed to a weak show in Germany, which reeled under the long lockdowns and other pandemic-related restrictions. Although the online format remained strong, we expect gradual normalisation in the coming quarters, as the store footfall increases (with the easing of restrictions). We will trim the earnings but maintain a positive stance on t
Ceconomy’s strong Q1 performance was not a surprise. However, management’s announcement to suspend the FY20/21 outlook is an unavoidable dent in investor sentiment. We believe the company is well placed to sail through the tough times (courtesy a strengthening e-com proposition and healthy liquidity). In essence, there aren’t any major concerns regarding the company’s performance in the mid/long term. We maintain a positive stance on the stock’s valuation.
Ceconomy announced a double bonanza with a promising ‘Strategic Day’ and the resolution of its dispute with MediaMarkt Saturn’s minority shareholder Convergenta. We believe this deal is a win-win situation and the company’s performance is likely to improve further in the forecast years. However, Ceconomy might to face the issue of two CEOs (one of them might need to move out) in the mid-term.
There were no major surprises in Ceconomy’s Q3 results. The announcement of new steps (harmonisation of management structure and standardisation of processes across all count) and c.€100m cost savings from FY22/23 seems to bode well for the investor’s sentiment. We maintain a positive stance on the stock valuation.
Ceconomy’s preliminary trading update was better than our expectations. A strong showing in the online format and the COVID-19-related cost-cutting measures were instrumental in ensuring that the Q3 EBIT was similar to the previous year’s. The exit run-rate of online is also noticeable considering that 100% of the stores were operational in June. We maintain our positive stance on the stock’s valuation.
Despite the decent Q4 performance, the shuffling at the top has raised fresh questions about the revitalisation of top-line performance and the successful implementation of operational efficiency plan. While the domestic performance is still in the black, management needs to address multiple pain-points for sustained top-line growth. We take a cautious stance on the future performance of the stock, although the positive recommendation is maintained.
Q2 performance was in line with our expectations. Despite the lfl decline, the negative calendar impact and a 50bp slump in the gross margin, the adjusted EBIT margin (even after excluding the Fnac Darty contribution) remained flat. While new management needs to focus more on the Netherlands, the Spanish issue seems non-structural. The launch of initiatives like a centralised pricing strategy is also a step in the right direction. No change to our stock recommendation.
New management has announced a restructuring and efficiency programme, which promises to uplift profit by c.25% (vs FY17/18 performance). The one-time impact is also not a concern, with a pay-back period of less than 1.5 years (if implemented successfully). We will revise our financial updates and stock recommendation upwards.
Ceconomy has finally posted a good performance (vs three profit warnings announced over the past year). The key takeaways were: 1) overall positive lfl growth (despite a weak October performance), 2) stable profitability despite a 60bp slump in the gross margin, and 3) further reduction in the tax rate (which we believe is structural in nature). Although the stock price is up c.15% today, we do not see any growth trigger unless the new CEO shares the performance turnaround plan (expected on 21 M
The appointments of a new CEO and CFO were much awaited but is still a step in the right direction. Although Jörn Werner has a good track record, we expect the stock price to remain range-bound unless he comes up with a tangible performance turnaround plan.
The poor guidance for FY18/19 has caught almost everybody by surprise (although our earnings estimates were below the consensus). There seems to be no end to Ceconomy’s struggles in its core market of Germany. We do not see any growth trigger for the stock price unless the new CEO (who is yet to be hired) shares a convincing performance turnaround plan. We have slashed the earnings and target price for the stock.
In Q4, while management was able to honour its annual revenue guidance (at CER), the lfl and reported revenue came in below our expectations. Softer lfl performance outside DACH is a negative surprise for us – we estimated that the majority of the pain (related to 8 October 2018 profit warning) was attributable to Germany. Although the company’s Board is scouting for a new Captain of the ship, a performance turnaround looks to be an uphill task. No change to our stock recommendation.
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