Douglas - even better

All,

Please refer to our analysis here.

The real news to us is EBITDA. It’s significantly better than we expected mostly explained by sales and a better gross margin than we had dared to assume, even when discounting the E46m Covid adjustments. 

Douglas sales beat our model by E100m on stronger than expected online sales (+70% to E766m LTM) and a better than expected recovery (April -61%, May -23% and June LfL + 4%). 

The company sees a permanent shift in consumer behaviour with first time online buyers particularly strong in Spain and Italy. 

WC was not a source of cash as we had planned, but instead consumed E-30m. 

CapEx was low and broadly in line. 

So with EBITDA (excl. Covid-19 adjustments up E~40m on our model and WC down E70m on our model and the remainder broadly even, CF thus far would be E30m lower than expected. However, we had built in an E20m allowance for Corona expenses and the company has postponed payments on rent (negotiating), taxes and social security (moratorium) in the order of E93m (not included in the P&L). Thus the final cash balance is E90m better than model - 90m of which to be partially negotiated away, but otherwise still payable in the future.

We consider the results very positive - in particular wrt. to run-rate sales and ongoing operations as well as available liquidity going into the September purchasing period.

Call is starting soon.

Wolfgang