This is what lies behind Home24's business figures

The furniture start-up looks back on a record year. Expectations for 2021 are high - despite the uncertain coronalage.

Marc Appelhoff has every reason to be happy as he makes himself comfortable in his parents' garden on Wednesday. The board of directors can present good company figures - and they are something to behold.

From 371.6 million euros in 2019 to 491.9 million euros for 2020, Home24 was able to increase sales, according to its own figures - and at least on the basis of operating profit, the start-up has now broken even over a full financial year. The EBITDA margin was three percent.

One reason for the good numbers is, of all things, the coronavirus. The pandemic drove people around the world into the home office, and at the same time furniture stores had to close. Both caused that more and more people ordered their furniture online, for example to redecorate the apartment or to furnish themselves sensibly for the time without office. When the lockdown began in March last year and the weather improved at the same time, many customers first stocked up on garden furniture at Home24. Afterwards, it was all about furnishing the home office.

"Basically, since our founding, we have been waiting for online demand for furniture to rise to a similar level as for fashion, electronics and toys. This was increasingly the case last year, many customers turned to our platform for the first time and ordered" says Appelhoff. As a result, the start-up was able to serve a good 2.2 million customers in the past fiscal year, which is 44 percent more than in 2019.

But the Corona lockdowns also meant that Home24 had to temporarily close its outlets and showrooms. Appelhoff said these typically contribute a low single-digit percentage of total sales in Europe. In Brazil, where Home24 operates under the "Mobly" brand, this business normally accounts for as much as around 20 percent.

Despite the online boom, Home24's bottom line is still in the red. The annual loss for 2020 is 17.1 million euros. In 2019, it was still a minus of 67.9 million euros. To turn this value also into the positive, but is currently not the goal, says Appelhoff. "If we were primarily concerned with a large payout, then we could steer in that direction," says the CEO. Because Appelhoff wants to keep investing, Home24 should keep growing.

There was a time when things did not go so smoothly at Home24. After the IPO in June 2018, the share lost value dramatically. At times, the price dropped from its issue price of 23 euros to three euros per share. One reason: the surprising withdrawal of Oliver Samwer, who with his investment company Rocket Internet was the largest shareholder at the time with 30 percent. Samwer long touted Home24 as a growth story, but then Rocket Internet surprisingly parted with some of its shares.

In addition, Home24 had problems with its then new inventory management system: the start-up could sometimes only process orders slowly, and costs rose. Appelhoff wants to have left these times behind already in the fourth quarter of 2019, at that time his start-up managed to break even for the first time. The adjusted operating profit rose to 2.5 million euros. "We have now shown for the 2020 financial year that we can consistently bring in operating profits, which confirms us in our business model," says the CEO.

But the supply chain continued to pose problems for Home24 in fiscal 2020, although all furniture retailers were affected. The reason: the impact of the corona pandemic. "We have experienced with our manufacturers that they sometimes could not get the raw material they needed or supply chains were delayed," says Appelhoff. "For all the goods we don't have in stock, the average delivery time has increased by a month."

Still, Appelhoff expects sales to grow again in fiscal 2021. Home24 expects 20 to 40 percent. The start-up is deliberately keeping the range wide for now. When it is foreseeable how the corona pandemic will develop further, Home24 wants to present a more detailed forecast. It also anticipates an EBIDTA margin of two percent.