(BFM Bourse) – The French specialist in the sale of online fashion items reported annual results above expectations, despite a difficult context for consumption.
Last year, consumers were attentive to the waltz of labels and more than ever shifted their spending towards the most essential goods, to the detriment of clothing, shoes and furniture. This was not without consequences on the activity of online and physical distribution players…
Maisons du Monde, for example, announced last week a massive savings plan intended to revive the furniture brand whose 2023 accounts were penalized by the purchasing power crisis.
An expected drop in activity
Last year, Spartoo was also at the forefront of the slowdown in household consumption. In 2023, the business volume of the French specialist in the sale of online fashion items amounted to 200.2 million euros, down 4.5% compared to the same period last year. last. This is slightly less than the expectations of TP ICAP Midcap, which expected a business volume of 203 million euros for 2023.
The turnover of the Grenoble-based group fell by 4.1% over one year, to 142.9 million euros. “This drop in activity was expected with a deterioration in the second half, particularly in the third quarter,” notes Florent Thy-tine, head of equity research at TP ICAP Midcap.
“Despite an increase in the average basket of 5 euros, the opening of 15 new points of sale (including 11 corners and affiliates) and the good performance of sales on the group’s brands (+21%), the group will logically have suffered from the pressure on consumption, particularly in fashion and clothing, penalizing volumes,” continues the specialist.
Despite this drop in activity, the group put its gross operating profit back in working order in 2023, which constitutes one of the “good surprises” of the publication, according to TP ICAP Midcap. With a loss of 1.2 million euros in 2022, the gross operating surplus (Ebitda) becomes positive again at 1.9 million euros, while the research office expected a return to operating profit limited to 0.5 million euros.
Spartoo has clearly reduced its advertising spending. Florent Thy-tine recalls that the group did not renew a marketing campaign on the small screen, which reduced the cost of acquiring new customers, down 23% to 10.8 euros. Good control of investment expenditure also clearly contributed to the recovery of the group’s profitability.
The operational loss was significantly reduced to 0.8 million euros, much less than what the design office feared (-3.7 million euros). Just like the net loss, which appears at 1.9 million euros, which is much less than the -4.6 million euros revealed for the year 2022.
“The other good news concerns cash generation”, appreciates TP ICAP Midcap, Spartoo’s operational cash flow also becomes positive again at 2 million euros in 2023, compared to a disbursement of 20.6 million euros last year, “thanks to good stock control”. The amount announced by Spartoo does not include exceptional proceeds of 2.5 million euros linked to a lawsuit against a shoe player. Free cash flow is also in positive territory at 0.7 million euros.
A “difficult” exercise
“This publication is therefore rather reassuring”, with annual results “a little more resilient than expected” for Spartoo, appreciates Florent Thy-tine. However, management has not ventured to provide any quantified outlook for 2024.
“The 2024 financial year should still be challenging while we do not expect any improvement in the consumption context in this first half,” says the specialist who adds that the group should however be able to continue its work of optimization of investment expenses including the closure of a warehouse.
In his eyes, the file lacks a catalyst in the short term, which pushes the analyst to adjust his 2024 scenario. Florent Thy-tine is therefore more “cautious” with a turnover now expected to fall by 5%, where he previously expected an increase of 1%.
However, with stocks at more than 50 million euros and an improving financial situation, the valuation seems “severe” justifying its purchase recommendation, although its objective is adjusted to 1.1 euros, against 1.6 euros previously.
On the Paris Stock Exchange, Spartoo more than resisted with a share which jumped 20% to 0.506 euros, around 4:50 p.m. But if we zoom in, the stock still shows a heavy decline of 90% since its IPO at the beginning of July 2021 at a price of 6.53 euros.
Sabrina Sadgui – ©2024 BFM Bourse
Are you following this action?
Receive all the information on SPARTOO in real time: