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 Management Board can present good company figures - and they are quite something.

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 managed to break even over a full financial year. The EBITDA margin was three percent.

One reason for the good figures is, of all things, the coronavirus. The pandemic drove people around the world into home offices, and at the same time furniture stores were forced to close. Both factors ensured that more and more people ordered their furniture online, for example to redecorate their homes or to furnish themselves sensibly for the time without an 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. After that, it was all about furnishing the home office.

"Basically, we have been waiting since our founding for online demand for furniture to rise to a similar level as for fashion, electronics and toys. This was increasingly the case last year, with many customers turning to our platform and ordering for the first time" says Appelhoff. As a result, the startup 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 Home24 had to temporarily close its outlets and showrooms. These typically contribute a low single-digit percentage of total sales in Europe, according to Appelhoff. In Brazil, where Home24 operates under the "Mobly" brand, this business normally accounts for around 20 percent.

Despite the online boom, Home24 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 continue to invest, Home24 should continue to grow.

There was a time when things were not going so well 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 had long touted Home24 as a growth story, but then Rocket Internet unexpectedly parted with some of its shares.

In addition, Home24 had problems with its then new merchandise management system: the start-up was sometimes only able to process orders slowly, and costs were rising. 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.

However, the supply chain also posed problems for Home24 in the 2020 financial year, although all furniture retailers were affected. The reason: the impact of the corona pandemic. "We experienced with our manufacturers that they sometimes couldn't get the raw material they needed or supply chains were delayed," Appelhoff says. "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 expects an EBIDTA margin of two percent.