Wittchen (WTN) Q3 2024 earnings summary

Executive summary

• 3Q24 revenue declined 10% year-over-year to 115.3m PLN, with net profit down 49.8% to 8.7m PLN; 9M24 revenue was 321.1m PLN, down 4.1%, and net profit 25.4m PLN, down 37.5%.

• Sales and profit drops were driven by weaker demand, intensified competition, and economic slowdown in key markets.

• Gross margin remained robust at 60.1% in 3Q24, supported by cost control despite pricing and freight pressures.

• International expansion continued with five new stores opened in 2024 and presence on 46 marketplaces across 24 European countries.

• The Group operated 117 stores as of September 30, 2024, including 16 international and 10 franchise stores in Ukraine.

Financial highlights

• 3Q24 EBITDA was 19.3m PLN, down 36.6% year-over-year; EBITDA margin at 16.8%.

• Operating cash flow for 9M24 was 24.5m PLN, down from 42.3m PLN year-over-year; inventory levels actively managed, down 10% year-over-year.

• Dividend paid in 2024 totaled 65.8m PLN, including 42.9m PLN from 2023 profit and 22.9m PLN from retained earnings.

• SG&A costs increased 3% year-over-year in 3Q24, with cost as a percentage of sales rising to 50.1%.

• Gross margin remained high, supported by cost control and moderate freight increases.

Outlook and guidance

• Management targets sales growth in Q4 2024, maintaining high gross margin and improving operating margin.

• 2025 plans include expanding the logistics center and shifting external warehousing strategy.

• Investment plans for 2024: 7.2m PLN for new and modernized stores, 6.5m PLN for IT and e-commerce infrastructure.

• Risks identified: weaker consumer demand, supply chain volatility, higher transport costs, and intensified competition from Asian platforms.

• Focus remains on returning to growth trends and maintaining profitability.