Europe’s Home & Living eCommerce giant Westwing plans Initial Public Offering

Westwing-founders

Westwing Group, the leader in inspiration-based Home & Living eCommerce in Europe, is planning an initial public offering and a listing of its shares on the regulated market (Prime Standard) of the Frankfurt Stock Exchange. The planned offering will consist of newly issued shares from a capital increase.

Founded in 2011 and headquartered in Munich, Westing today is the leading European online Home & Living consumer brand. The company is running a eCommerce business model as a ‘curated shoppable magazine’ with the mission to inspire and make every home a beautiful home. The company offers the full range of Home & Living categories reaching from home decor products, textiles and furniture to lighting and kitchenware. Westwing seamlessly integrates content and eCommerce into an integrated platform, powered by creativity, technology, and operations.

Stefan Smalla, Founder & CEO, stated: “We are proud of our strong growth and profitability and will continue that path. The planned IPO will provide us with additional funding that we will use to continue our profitable growth.”

The first time we wrote about Westwing was in 2012, when the startup raised $50 million in a round led by Summit Partners. In 2014, the company announced that it increased its net revenue to €110 million and secured another €72 million in a new funding round. 2015, we reported about another funding round, where Westwing raised €25 milion. In total, Westwing was able to raise over €200 million in venture capital.

The company’s daily themes combine inspiration and shopping on Westwing’s sites and apps. The daily themes form the center of a daily newsletter. In addition to renowned and upcoming designer brands, Westwing offers high-margin private label products. With already more than 5,000 products, the company’s private label offering combines good quality with affordable prices. All private label products as well as best-selling brands are offered on Westwing’s permanent assortment shop WestwingNow organized in fully shoppable looks.

With a creative team of more than 100 editors, photographers and journalists, Westwing focuses on continuous inspiration-driven customer engagement; 90% of Westwing customers are women. As a result, Westwing has exceptional brand love and loyalty at the core of its business: 85% of 2017 sales were made with customers who visited the Westwing sites and apps on average 100 times per year. In addition, Westwing has outstanding customer lifetime values of €900 Gross Merchandising Value (GMV) per customer after 4.5 years.

Westwing is well-positioned in the attractive but fragmented Home & Living market. The addressable market of €575 billion globally (and €117 billion in the European Westwing markets) stands at the tipping point of offline to online transition, with eCommerce penetration of currently below 5% in the Home & Living market in the eleven European countries in which the company currently operates.

Westwing operates seven warehouses across Europe, where products are packed, stored, and prepared for shipping. Deliveries are handled by reliable third-party carriers. Westwing’s day-to-day operations are backed by its custom-built mobile-first technology platform. This platform enables Westwing to integrate and control its supply chain comprising 5,000 suppliers from around the globe. Data collection and analytics based on proprietary software enable the company to efficiently develop and expand its operations, allowing Westwing to personalize content and develop private label products according to customer preferences.

Following a phase of rapid growth in the early stage of its corporate development, Westwing focused on profitability more recently, and achieved a positive Adj. EBITDA in the 4th quarter of 2017 and in the first two quarters of 2018. By continuing its path of profitable growth, Westwing further improved its key financial metrics in the first half of 2018, growing its revenue by 22% year-over-year to €120 million (H1 2017: €99 million) and achieving an Adj. EBITDA margin of 2%. The company’s strategic goal is to reach an Adj. EBITDA margin significantly above that in the long term.

Westwing’s DACH segment (Germany, Austria, Switzerland) has been at the forefront of this development, growing even faster and being more profitable than the group as a whole – enabled by the full roll-out of Westwing’s business model of daily themes at Westwing, permanent assortment at WestwingNow, private label products, and organic marketing. Targeting further profitable growth, Westwing plans to roll out this successful DACH business model into all its other markets. As part of this growth initiative, the company’s higher-margin private label offering is a key strategic driver to further improve profitability and accelerate growth. Currently, private label makes up around 15% (as of Q2 2018) of GMV of the Group. Increasing this share to 50% in the long term provides significant upside potential.

The planned offering is expected to consist of an IPO in Germany and private placements in certain jurisdictions outside of Germany. Proceeds from the planned all-primary offering are expected to amount to approximately €120 million. The company intends to use these proceeds primarily for further growth. Westwing plans to invest into its technology platform and customer experience. In addition, the company intends to enhance its product offering and private label products. In order to drive its international market growth, Westwing plans to invest in marketing and customer acquisition. A part of the proceeds from the offering will also be used for the repayment of debt. The lock-up period in connection with the offering is scheduled to last 24 months for the members of Westwing’s management board and 180 days for existing investors and the company.