Douglas - Queues
All,
We have not updated our model. Please find a previous version here.
The most important piece of news we have heard today was that Polish and Dutch customers post lockdowns are queueing in front of stores and that sales are “very promising”. France and Germany are expected to exit their respective lockdowns in the coming weeks and management are making hope for business as usual from June.
Q2:
Douglas figures were dreadful as widely expected and the anticipated WC outflow did occur, at least to a large extent. Cash is comfortable, not abundant, but management aim not to draw the RCF this summer.
Tougher YoY comps for Online:
Recent weeks have shown continued strong growth of the online business vs last year, where those weeks already fell into the first lockdown period. Clearly, the growth rates of 75% are a thing of the past now. Management proclaims confidence that the online migration will not reverse and that online will continue to grow at a fast rate, but it did not provide a more granular breakdown of how the online growth is distributed across geographies in or out of lockdown at present.
Outlook:
The store restructuring program remains on track and management are not anticipating a cost overrun above the ear-marked E94m. There will be some E30-50m of outflow from WC, taxes and other OCF items, but Douglas is really all about the return of the store network now. In that regard, the queues outside re-opening stores are very encouraging.
We will update our analysis shortly.
Happy to discuss,
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003