In order to achieve this, the Düsseldorf-based company is planning significantly more sales in online trading. In addition, the stores of MediaMarkt and Saturn are to be comprehensively modernized and the profitable business with services such as device repairs is to be expanded.
Adjusted earnings before interest and taxes (EBIT) will reach over 500 million euros by the 2025/26 financial year, the company announced on Friday at a capital market day in Cologne. For comparison: in 2021/22 it was 197 million euros. Gross margin and free cash flow are also expected to improve by mid-decade.
The plans were well received on the stock exchange. The paper listed in the SDAX rose by nine percent at times. In XETRA trading, the Ceconomy share has recently gained 2.54 percent to 2.26 euros. Since the beginning of the year, investors have been able to record an increase in value of around one-fifth in the portfolio. The price level reached on Friday was the highest level in two weeks. Stock market traders praised the newly issued medium-term targets, which exceeded analysts’ expectations.
Ceconomy will focus heavily on online trading in the coming years and also wants to expand its app. While the sales generated on the Internet accounted for just under a quarter of group sales in the past financial year, the proportion is set to rise to 30 percent by 2025/26.
At the same time, CEO Karsten Wildberger does not want to neglect the presence in the shopping streets and department stores. The costs are to be reduced and the area productivity increased. In addition to the planned modernization, Wildberger wants to react to changing customer requirements with new store formats, as it was said on Friday. In addition to the classic markets, there should also be significantly smaller express shops, as well as much larger shop worlds in which products are displayed and customers should be inspired.
Another important building block for higher profitability for Ceconomy is the service business. This includes, but is not limited to, warranties and software licenses that customers may purchase. In addition, the company sees “an attractive recurring revenue stream” in subscription services designed to build long-term customer relationships.
CFO Kai-Ulrich Deissner said Ceconomy was determined to expand the business profitably. At the same time, cost discipline and strengthening liquidity are “higher on our agenda”. The gross margin is expected to rise to 20 percent by 2025/26, having been a good 17 percent in the past few years. The cash flow adjusted for lease payments is expected to reach around 200 million euros.
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