Following years of post-covid normalization, WEW is back on a self-induced growth path, independent of the consumer sentiment. With this multi-pager we dive deeper into this compelling investment case of one of our alpha ideas:

Rightsizing at the right time, in the right way. The post-COVID value creation plan fundamentally reshaped the company’s operating model. Management swiftly adapted to a new demand environment while always keeping a lean, scalable expansion across Europe in sight. The company rightsized its cost base, restructured several markets, modernized IT, and centralized logistics into a state-of-the-art hub, driving fulfillment efficiency gains and cost control. These actions have created a more agile and efficient organization, well positioned to capture future growth opportunities.

Westwing Collection - higher value, higher margins. As a result of the rise in WWC share of GMV from 41% in FY ´22 to 65% in FY ´25e, AOV went up from € 154 in FY ´22 to € 242 in FY ´25e. Consequently, a higher average order value (AOV) has driven structural gross margin gains (47.1% in FY ´22 to 52.2% in FY ´25e) and deeper brand loyalty. As the mix shifts further towards WWC, we see continued upside to profitability, one of Westwing´s key long-term levers.

European expansion resumes; UK next? We anticipate rapid progress in recently entered markets, with early signs already visible in the International segment’s +11% yoy sales growth in Q3 ’25. As Westwing continues to build scale across Europe, the next strategic leap should be the UK, a high-potential market that could significantly expand its addressable market reach and validate the brand’s ability to replicate success beyond the EU. We see this as a key catalyst for an accelerating top-line and as further re-rating potential.

High cash-generation with recovering capital efficiency. WEW’s business model benefits from favorable working capital dynamics, allowing it to operate with mostly negative WC and strong cash conversion. Currently, around 10% of sales convert to FCF, a figure expected to rise toward up to 20% as margins continue to improve. In addition, capital efficiency should recover from negative levels (eNuW: 13% ROIC FY ´25 vs -7% in FY ´24), lifted by higher adj. EBITDA margins, and decreasing amortization of intangibles, as the company leaves the legacy shop software change behind.

The combination of a highly attractive valuation (4.2x FY’26e EV/adj. EBITDA), management´s clockwork delivery of the value creation plan, imminent topline growth with operating leverage, a strong net cash position (€ 58m per Q3 ´25) and upbeat cash generation, underpins our conviction in a high-reward investment case and a compelling entry point into one of Europe´s leading design brands. Therefore, we reiterate our BUY rating and keep WEW in our AlphaList with an unchanged PT of € 22.00, based on DCF.