Investing.com -- Shares of Douglas fell by 15% today after the company reported mixed results for the first quarter.
The company’s Q1 sales matched the Vara consensus at €1.65 billion, showing a 5.8% increase year-over-year (YoY), with like-for-like sales up 5.3% YoY. This performance was supported by a 5.7% YoY rise in store sales and a 6.2% YoY increase in E-Commerce.
However, adjusted EBITDA was 5% below consensus, coming in at €354 million, a modest 1.5% rise YoY, but with a decrease in adjusted EBITDA margin to 21.5% from 22.4% in the same quarter last year.
The growth in group sales, excluding the divested online pharmacy Disapo, was noted at 6.5%, while e-commerce sales, excluding Disapo, experienced a more significant increase of 8.3%.
Despite the gross margin pressure, Douglas has continued its deleveraging efforts, reporting a leverage ratio of 2.3x for Q1. Free Cash Flow showed resilience with a 7.6% increase to €494.5 million, up from €459.4 million in the previous year.
Douglas confirmed its guidance for the fiscal year 24/25e, although it now expects adjusted EBITDA to be at the lower end of the €855-885 million range, which aligns with the consensus at €873 million. Sales projections remain within €4.7-4.8 billion, with the consensus sitting at the lower end of that range.
The company also anticipates an average Net Working Capital of less than 5% of sales, slightly above the consensus of 4.4%, and an increase in consolidated net income to €225-265 million for FY 24/25e, with the consensus at €247 million.
The company experienced a weaker start to the new calendar year, with a noticeable decline in sales momentum during December that continued into the early weeks of the year.
This slowdown was primarily due to weaker store sales in Germany and France, exacerbated by an unusually late Black Friday. Despite these challenges, Douglas opened 20 new stores and refurbished 34 existing ones between October and December 2024.
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