Dear ladies and gentlemen, welcome to the earnings call of Westwing Group SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by the zero on your telephone for operator assistance. May I now hand you over to the CEO, Stefan Smalla, who will lead you through this conference. Please go ahead, sir.
Thank you. This is Stefan Smalla. Good morning, everyone. Thank you for joining our 2021 earnings call. I'm glad to be speaking with all of you and hope that you're safe and well. Today, we'll review our full year and Q4 2021 results and provide some information on how 2022 has started and what we expect for the full year. Joining me on this call is our CFO, Sebastian. After the usual disclaimers about forward-looking statements, let me remind you of the Westwing mission: to inspire and make every home a beautiful home. In 2021, we continued to do just that, helping our customers beautify their homes while running a profitable and growing company.
In terms of agenda for today, as usual, we have a business update by me, financial details by Sebastian, a summary by me, and then we'll move on to Q&A. Before jumping into the main part of our presentation, let me first begin by providing an update on the impact of the war in Ukraine on our people and our business. As I shared with our team a few days after the beginning of the war, we're shocked regarding the war in Ukraine and stand in solidarity with the Ukrainian people. Everyone deserves to live in peace, respect, and safety, and what's happening in Ukraine at this very moment is horrible. We have many Ukrainian team members at Westwing in headquarters and our international offices, and especially in our warehouses in Poland.
While we do not have business operations in the Ukraine, we are very much a company with lots of Ukrainian team members. In response to the devastating turn of events, Westwing has donated a total of EUR 100 thousand in emergency aid to Caritas International. To support our affected team members, we have offered flexible vacation and breaks to deal with family matters, in addition to offering legal visa and relocation, as well as mental health assistance. Additionally, our teams rallied together and conducted collection drives in partnership with the Ukrainian Church of Mary Protection in Munich, as well as municipal help point in Poznań, close to Westwing's warehouses. We also were able to make several donations of Westwing inventory to be put to immediate use for refugees.
In terms of impact on our operations, Ukrainians are the third largest nationality at Westwing, with more than 300 team members plus temporary warehouse workers. We have so far seen limited impact on our warehouse operations. Trucking in other areas with Eastern European workers might be affected, but for now, this remains to be seen. In our industry, a significant share of wood for furniture comes from Ukraine, Russia, Belarus, and we are working closely with suppliers and partners to source wood from other countries. Overall, there's a high risk and low visibility on consumer and market sentiment in general. We will remain vigilant in closely aligning our people and business to ensure minimal impact to our operations. With that, I'd like to begin with the business update for 2021.
2021 was a year of profitable growth for us, where we grew our business by more than 20%, fueled by a growing active customer base made up of loyal repeat customers, as well as new customers, and we generated profitability of more than EUR 40 million of Adjusted EBITDA. Yet 2021 was also a very dynamic year with abruptly changing consumer sentiment and macro conditions. In the first half of the year, with the pandemic still persisting and corona restrictions still in place across most of our markets, our positive top-line level shifts continued. We observed very positive consumer sentiment, which resulted in record growth for us. As flagged in our last two earnings calls, we had already expected the second half of the year to present a more challenging landscape, and this is also what happened.
As the lockdown conditions eased, we encountered over-seasonality over the summer period as consumers looked to participate in offline leisure activities following the ease in lockdown conditions. Furthermore, the reopening of brick-and-mortar stores also resulted in some share of consumer spending flowing towards offline home and living stores. In addition to a changing top-line dynamic, global supply chain disruptions continued to persist, which led to significant challenges with respect to inventory and sea freight container cost management. Inflationary headwinds and growing uncertainty over the macro environment also resulted in lower consumer confidence versus the first half of 2021, and consequently in softer than expected trading over the last quarter of 2021 and also in Q1 2022. These overall challenging top-line developments were visible across the whole e-commerce home and living sector, with many e-commerce players facing lower growth rates and profitability than expected in the short term.
What is clear to us is that the adoption of home and living e-commerce continues to happen in the medium term. The pandemic certainly accelerated this change in consumer behavior and preference, and we believe the past two years have allowed us to remain well positioned to seize this opportunity and strengthen our position in the market. By driving key strategic investments, we will continue to build upon our position as the leader in inspiration-based home and living e-commerce and form the basis for sustainable growth for the years to come, irrespective of quarterly dynamics and volatility. With that, I am pleased to share our performance for the full year 2021. We realized revenues of EUR 522 million at a year-over-year growth rate of 21% on top of the extraordinary baseline from 2020.
We generated profits of EUR 40 million in Adjusted EBITDA at 7.7% Adjusted EBITDA margin. Profitability was converted into positive EUR 2.7 million Free Cash Flow, which was heavily impacted by intensive cash finance inventory mitigation measures against the challenges caused by supply chain disruptions. Our total number of active customers increased. It is very encouraging there to see that our growth was driven not only by our loyal existing customers, but also through strong new customer acquisition. At the end of Q4 2021, our active customer base stood at 1.7 million, 11% up versus Q4 2020. In terms of cohort behavior, we see the 2021 and 2020 cohorts continue to behave in line with our expectations and follow a similar pattern to what we had seen in our pre-pandemic cohorts.
Overall, we achieved the GMV retention rate of 91% in 2021, with a very strong H1 and a weaker H2 in terms of retention dynamics. Let me now walk you through some details. Full year 2021 revenue growth was at 21% on top of an exceptionally high baseline from 2020. We delivered revenue of EUR 522 million in 2021. Compared to 2019, this means a growth of plus 96% in just the last two years. Pretty much doubled the company size in 2021 versus 2019.
This growth went hand in hand with an increasing active customer base, which on a last twelve months basis, grew by 11% to 1.7 million active customers or versus 2019 almost doubled. This growth was very similar across both our segments. In terms of GMV retention, we realized an overall full year retention rate of 91%. The 91% retention rate was driven by a very strong above 100% retention in H1 2021, driven by the positive trends that I spoke of earlier. We saw this to be lower in the second half of the year, driven by various factors, including a high first time customer GMV share in 2021, with typically higher churn in the first year. Overall, less consumer interest in home and living, inflation and other macro factors.
I would now like to give you some color and details on cohort quality. Coming specifically to the cohorts we have acquired during the pandemic, we can see that 2020 and 2021 cohort behavior is in line with pre-pandemic cohorts. We closely monitored this behavior and dynamics over 2020 and 2021 pandemic cohorts. What we see here is that there are no outliers compared to historicals. How to read those charts? The left chart shows Q2 cohorts for 2017, 18, 19, 20 and 21. The right chart is the Q3 cohorts for those years. On the X-axis, you see months after first purchase, and on the Y-axis, you see cumulative GMV for every first time buyer.
One line means, let's take the 2019 Q2 cohort, the light green line on the left chart. In the month of their first purchase, the average Q2 2019 first time buyer made circa EUR 170 of GMV. By the 12 months after their first purchase, they had made another roughly EUR 170 of GMV for a total cumulative GMV of roughly EUR 340 in the total first 13 months as a Westwing customer. That's how you read that. What does that mean? Looking at the Q2 and Q3 cohorts of 2017 to 2021, we see that cumulative GMV per first time buyer for the 2021 and 2020 cohorts is roughly on par with older cohorts.
Conclusion is the cohort quality of the customers acquired during the pandemic is similarly high than our older cohorts, so all performing quite similarly. That's quite good. As you know, the loyalty of our customers results in a very attractive customer lifetime spend, which is at the core of Westwing and provides the basis to our profitability and growth strategy. Loyalty of our customers continues to benefit us by resulting in a very attractive customer lifetime spend, and the new cohorts are no different. As a reminder, from the time of first purchase, we see the lifetime value of our customers continue to rise, resulting in 1,500 EUR GMV after eight years. Our customer lifetime spend then continues to increase and increase, and it doesn't stop, and it doesn't look like the new cohorts are behaving any differently.
This is the strength of our business model and will continue to deliver upon the trust placed in us by new and existing customers alike. I now move to our priorities for 2022 and an update on this year thus far. To set the scene, our priorities for this year have been derived from the current relatively low consumer sentiment, which is not only affecting Westwing but also close peers. Currently, we are seeing a very weak market environment with relatively low consumer sentiment in home and living. This is driven by all kinds of factors, most importantly, the emergence of Omicron, coupled with an apparent ending of pandemic restrictions, overall high macro uncertainty, especially in terms of inflation, worries about the geopolitical landscape and war, and customers' desire to travel again and spend time outside of their homes.
We are seeing that consumer interest in spending for home and living e-commerce is on an exceptionally low level versus previous years. Additionally, as mentioned in our update for 2021, we're facing extremely high baselines from the previous year in the first half of 2022. This is because of the exceptional growth rates of early 2021, caused by the pandemic-induced acceleration of the business. I want to emphasize that the extremely steep jump from 2019 makes it difficult to interpret the year-over-year growth rates versus 2021, but these baselines will fade out in the second half of 2022, and we will then begin to see the growth rate normalization henceforth. This needs to be kept in mind when interpreting the growth rate.
We will look at the size differential versus before the pandemic much more than year-over-year. Coming then to recent performance. As described, we continue to see the effects of a softer consumer sentiment in our current trading. In Q1 2022 to date is circa 20% lower than Q1 2021, still circa 50% higher than our Q1 2020. Our performance is temporarily driven by the extraordinarily low consumer sentiment and lower than what we would usually have expected. At the same time, we are confident that this temporary development will subside, and we'll get back to attractive growth rates soon. With this in mind, let me share our priorities for this year.
First and foremost, our first priority is protecting top line in a dynamic and uncertain macro environment while managing profitability levels alongside inflationary headwinds and continued supply chain challenges. While we see an overall muted consumer sentiment driven by factors including inflationary pressures, lower consumer confidence, and also uncertainty driven by the war in Ukraine, we remain confident in our ability to protect our top line. We believe our business model is poised for the acceleration in e-commerce home and living, and external factors do not take away from the fundamentals. Supply chain is a topic we have spent a considerable amount of internal resources to successfully manage. If and when the overall supply chain stabilizes remains to be determined, but we have utilized levers available to us to be able to manage our profitability better.
Sebastian will cover supply chain a bit more in this section, but what I would like to highlight here is that we will manage and protect our profitability in a time of high inflation and macro volatility, as demonstrated by our track record. Second priority for 2022 is remaining focused on driving strategic investments for long-term growth in line with our Customer Experience 2.0 strategy, a multi-year strategic program to improve our customer experience and ultimately our future growth drivers, as highlighted in our capital markets day last year. We'll continue to scale our investments into marketing, Westwing Collection, and building and further scaling our technology platform. In a minute, I will share some more details on some of these initiatives and key areas that we are focused on.
Lastly, our third priority is to remain long-term oriented by focusing on key areas to enable future growth despite short-term macro development. We remain committed to our midterm targets of EUR 1 billion of revenue and shift our previous time frame from 2024-25 to 2026. This decision has been made as the current market sentiment had not been factored into our initial time horizon and will result in deviations to our expected performance. Regardless of this adjustment, we firmly believe there's still plenty of headroom for further e-commerce adoption. Our EUR 100 billion home and living market is still very early in this process, and the upside potential remains massive. This opportunity from higher online penetration will enable very strong market growth rate for years to come and consequently also allow Westwing to grow strongly in the coming years.
We believe we are well positioned to achieve these targets led by a very clear brand ambition. We aim to be the most desirable consumer home and living brand for home enthusiasts. Coming now towards the progress we have made under our Customer Experience 2.0 strategy, our high-margin Westwing Collection continues to be on track towards the 50% strategic target share. We are successfully growing our share of Westwing Collection products, where we sell gorgeous best sellers at great prices and fantastic margins. We are proud to be at 37% of group GMV share as per Q4 2021, resulting in EUR 200 million in Westwing Collection GMV for the year 2021.
Our targets for 2022 include expanding the range of textiles, wardrobes, and decorative items within the Westwing Collection and also increasing the share of these items within our international markets. We're also deeply focused on further embedding sustainability into the Westwing Collection, and we're thrilled about our We Care by Westwing Collection line launch and expansion over the coming months. The Westwing Collection remains a diamond in our business, one that we will aggressively continue to grow and polish. Helping to make the Westwing customer experience even more enjoyable are our new businesses. With our Westwing Studio service, for instance, we provide an unmatched customer experience. Customers of the Westwing Studio receive a consultation by a professional designer, a 3D concept as an incredible CGI of their future room, and their personal shopping website, all for EUR 119.
In 2021, 4,800 customers booked our studio service for a total of 7,100 rooms. After this service, we see that customers spend more than EUR 2,000 on average at Westwing, truly showcasing the value add of this service. In 2022, we'll further improve the studio experience by scaling the service further, as well as differentiating our offering. For another service, with the ongoing rollout of our Westwing Delivery service, we're setting the next level of post-order experience. Initially launched in 2020 as a pilot project in Munich, the Westwing branded truck started their tour in Munich. Following fantastic feedback as well as achieving a Net Promoter Score of 92%, we also rolled out the service to Hamburg as of February this year.
With Westwing Delivery, which is free of charge for customers, Westwing enables higher delivery reliability with less risk of transport damages. Most importantly, we are able to ensure great customer interactions with our passionate and highly skilled delivery team, which is also trained in assembling Westwing's beautiful products. They also usually bring a small gift as a surprise, which always delights our customers. The Westwing Delivery service is also set to expand to Berlin this year, when we will deliver circa 20% of our DACH large furniture orders ourselves, followed by a gradual rollout to other cities in Europe over the next few years to further deliver an exceptional customer experience with Westwing. Last but not least, I want to share details of our ambition on sustainability and our new Sustainability Strategy 2030.
At Westwing, we believe that there is a sustainable way to live beautifully, and we are here to create it by designing honest products and inspiring our customers to live and enjoy a more sustainable lifestyle. Sustainability touches all parts of our business, from people to products and from customers to supply chain. Therefore, our new Sustainability Strategy 2030 covers all aspects of our business model based on our belief that there is a sustainable way to live beautifully. Sustainability is already deeply embedded into our operating model, and while we will continue to do better, we are so far very pleased with our sustainability journey and score within the top 30% of our industry.
Selected sustainability initiatives that we've already successfully implemented include achieving climate neutrality in our core business operations, meaning all Scope 1 direct carbon emissions from heating, combustion of fuels from own vehicles, and fugitive emissions from air conditioning, as well as all indirect emissions from purchased electricity under Scope 2 by offsetting 6,906 tons of CO2 equivalents. A commitment to using materials in our products and packaging that have the best environmental, social, and ethical profile possible. Therefore, we have switched to shipping our products in 100% recycled cardboard boxes in most warehouses already. We launched more than 100 campaigns in a daily themes business to highlight sustainable brands and also added a filter feature to our permanent assortment website for sustainable Westwing Collection products.
90% of our returns are given a new life by being resold on our site, and we have so far audited 99% of our non-EU suppliers for Westwing Collection on social aspects and are committed to partnering with our suppliers to develop and improve their environmental and social performance. Our Sustainability Strategy 2030 sets clear focus areas and commitments for our sustainability efforts. The strategy focuses on four main aspects, making Westwing a company people aspire to work for by creating a safe and fulfilling workplace. Enabling our customers to make more sustainable choices through credible product labeling and responsible communication. Making the Westwing Collection more sustainable through conscious material sourcing and product design and rethinking product packaging. Ensuring our suppliers act on sustainability by partnering closely with them to reach our ambitious goals.
There are many sustainability topics that we care about, but we can't do it all at once. To prioritize our efforts, we have decided to focus on six priority topics based on their importance to us, our stakeholders, and our expected impact as a business. These six areas are climate and energy, material sourcing, fair working conditions, packaging, supplier impact, and responsible marketing. Further details on our sustainability ambitions and Sustainability Strategy 2030 can be found in our first ever Sustainability Report 2021, published with our annual report. I will now hand over to Sebastian, who will take you through the financials of our business.
Yeah. Thank you, Stefan, and good morning, everyone. Overall, 2021 was a dynamic yet successful year as our business delivered profitable growth. While we continue to see volatility in the macro environment, which is driving a lower consumer sentiment, we remain agile in responding to commercial and humanitarian turmoils, showcasing the resilience of our teams and business model. I therefore want to highlight that during the currently challenging environment, it is more important than ever to not lose sight of the bigger picture by remaining focused on our long-term ambitions in spite of the rapidly changing quarterly landscape. With that, let me provide you with the financial details of financial year 2021 before I then give you details on our outlook for the year 2022.
Revenue for the full year 2021 grew on top of a strong baseline from previous year and stands at EUR 522 million, leading to 21% growth compared to financial year 2020. Revenue for the fourth quarter of 2021 was at EUR 149 million, which was down 4% with Q4 2020. Stefan mentioned, we began seeing softening consumer sentiments starting from October and compared against a very strong baseline, resulting in an overall weaker Q4 relative growth. On a full year basis, growth was seen across both our segments, with DACH generating revenues of EUR 297 million, 22% growth year-over-year, and international segment generating revenues of EUR 226 million, 19% growth year-over-year.
Let's take a closer look at the P&L for Q4 and the full year 2021. Our gross margin for the full year was at 49.1%, or 0.3 percentage points behind the full year 2020. We have been able to keep our gross margin more or less in line with 2020 while seeing significantly higher sea freight costs and general cost inflation in H2 of 2021. On a quarterly basis for the fourth quarter, we can see that the year-over-year impact of minus 3.8 percentage points to our gross margin as the impact from the supply chain disruptions and higher sea freight have been fully visible in the fourth quarter P&L. We mitigated some of the impact by passing on cost increases partially to our customers, as well as further increasing our Westwing Collection share favorable margins.
Our fulfillment costs increased by 0.6 percentage points for the full year vs. the previous year. The rise in logistics costs resulted mainly from higher warehousing costs due to the need for short-term warehousing required for the inventory buffers. In addition, we also raised salaries for our warehousing staff, driven by a high inflationary environment in Poland, which is also factored in here. Overall, the collective effect of our gross margin, coupled with rising fulfillment costs, resulted in a contribution margin of 28.7% for the full year 2021, which is down 0.9 percentage points compared to last year. We consider this strong given all the challenges in the global supply chain and mainly a result of our high margin business model.
In terms of marketing, we remain committed to investing significantly into our organic marketing model and support this through new investments in brand awareness and attractive performance marketing channels. Our marketing ratio of 9.4% for the full year 2021 is in line with our target marketing range of 9%-11% over the next few years. We remain confident that these marketing investments will enable Westwing's ambitions of becoming a EUR 1 billion revenue company. Our tech investments are also visible in our G&A ratio. We can observe that our growth investments, especially in technology and Westwing Collection, heavily contribute towards our G&A ratio of 14%, which is less than one percentage point behind last year as the investments are still ramping up.
We believe these investments will pave the way for future growth and help deliver the targets we have set for ourselves. Overall, this brings us to an Adjusted EBITDA margin of 7.7% for the full year 2021. We are happy with our performance here given the headwinds we have seen in H2 and came just 0.3 percentage points under our guidance given a year ago where we had limited visibility over the various challenges, especially supply chain related, that we would face in 2021. With the rise of inflation and freight rates remaining on elevated levels, we expect lower profitability to also affect us in 2022. I will touch more on this later. Guided by the vision we have for our business, we will continue to remain long-term oriented.
Fully Adjusted EBITDA for 2021 comes to EUR 40 million in absolute terms and EUR 10 million for Q4 2021 alone. Adjusted EBITDA margin in financial year 2021 for both the DACH and international segment is down with the financial year 2020, but still a significant improvement compared to financial year 2019. The higher costs associated with the global supply chain disruptions, coupled with our strategic growth investments, have clearly affected our result in both segments. On a quarterly basis, we see these effects with Adjusted EBITDA for Q4 coming in at 7% for the group, -9 or 9.5 percentage points lower than Q4 2020.
DACH continues to be very profitable at a +13.1 adjusted EBITDA margin for the year 2021, while international reports a 1.2% margin in the same period. Turning now to our cash flow in 2021, starting with our net working capital and CapEx development. Our net working capital position at the end of 2021 stood at positive EUR 4 million. This increase is mainly driven by higher inventory levels. The high inventory levels are mostly driven by supply chain disruptions which make it, in general, difficult to work with optimized inventory levels and require extensive inventory buffers to cover supply and demand volatility. Also, we bought for higher Q4 growth than we have finally seen.
While we expect Net Working Capital to remain significantly positive in the first three quarters of 2022, we are confident that these effects are temporary and that we will begin returning to our structurally negative Net Working Capital position, gaining pace towards the end of 2022. Our CapEx ratio is 2.9% of revenue for the full year 2021, representing a EUR 7 million increase in CapEx spending with the previous year. This increase is mainly driven by investments into equipment for our new warehouse and investments in our growing technology function, with its focus on the development of proprietary software. Our positive Free Cash Flow of EUR 2.7 million leads to a strong net cash position of EUR 97 million per the end of 2021.
Let me emphasize that this very strong net cash position provides us with reassuring strategic optionality during these highly volatile and uncertain times. Before I now turn to the details of our outlook, let me frame our strategic view in the context of the broader macro environment and how we are managing the business within that. Earlier, Stefan shared with you our priorities for 2022, which are protecting our top line while managing profitability and driving our strategic investments to deliver our customer experience improvements. Even as we remain long-term oriented by focusing on key areas to enable future growth, we have to face the current consumer sentiment that we are observing. Inflationary and geopolitical developments have impacted consumer discretionary spending, further softening demand in home and living as consumer behaviors normalize in a post-pandemic environment.
While we see these are temporary effects that will have no impact on the sizable opportunities that lie ahead for us, we factored these prevailing realities into our outlook for the year 2022. On top line, we guide for revenues in the range of EUR 460 million-EUR 540 million, implying year-over-year growth rates between -12% to +3%. We have considered a low consumer sentiment and adverse market developments in combination with extraordinary baseline effects to lead to negative year-over-year growth in H1 2022, with positive year-over-year growth rates expected in H2 2022, as baseline from previous year normalizes and consumer sentiment improves.
On profitability, we guide an Adjusted EBITDA margin between -2% and +3%, and this profitability outlook factors in lowered growth expectations, strategic growth investments that have been taken and will be fully visible in 2022, and ongoing effects from supply chain disruptions. Also here, the second half of the year will show improvements with the first half of the year. Our current outlook reflects an environment of high uncertainty around consumer sentiment, supply chain disruptions, inflation, and geopolitical developments, and does not foresee any further deterioration with the Q1. I would also like to comment on our previously announced midterm target of EUR 1 billion in revenue. Evidently, at the expected growth for 2022, we are unlikely to meet our target within our previously announced timeframe of 2024-2025.
Therefore, we believe our target of EUR 1 billion in revenue is achievable by 2026, and we will continue to scale our business to capture the vast opportunity presented by a highly fragmented EUR 120 billion home and living market that we expect to continue to move further towards e-commerce. Our midterm profitability target of 10%-12% Adjusted EBITDA margin does not change. We have proven the potential of our highly profitable consumer last brand strategy and the scalability of our business model, and I want to take this opportunity to provide some more details on how the path towards our midterm profitability target will look like.
Let me start with giving some background on the 2022 outlook. We expect lower consumer sentiment to translate into a lower top-line growth, as implied by the revenue guidance I just shared, which in turn will lead to negative operating leverage on our fixed cost. Additionally, our strategic growth investments and the continuation of supply chain disruptions are further expected to reduce profitability in the short term, bringing us within our guide range of -2% to +3% in adjusted EBITDA margin for 2022. Beyond 2022, there are several levers that will then ensure our trajectory backs towards our 10%-12% adjusted EBITDA margin midterm target. Firstly, we expect supply chain costs, in particular sea freight container costs, to normalize again, which will benefit our gross margin.
While we do not expect that sea container freight will return to pre-pandemic levels, we do expect further reduction in costs from 2023. Secondly, we will continue to expand our highly profitable Westwing Collection business towards our 50% of Group GMV target. Based on this mix shift, we will be able to continuously improve our contribution margin over the coming years. Thirdly, based on our EUR 1 billion revenue target, we will generate significant scale effects and return to showing operating leverage again. In 2020, we were able to prove how well our business model scales, and therefore, we are absolutely certain that with a growing top line, we will again show significant operating leverage, especially on our G&A costs.
Even though 2022 profitability is below our initial expectation, given the current very challenging circumstances, we reiterate our 10%-12% Adjusted EBITDA midterm target. As I wrap up, I want to highlight again that we are committed to continue investing into our ambition to generate attractive long-term profitable growth in the coming years. We will maintain our long-term mindset when steering Westwing through these uncertain times. With that, I would like to turn the call back to Stefan before we take your questions.
Thank you, Sebastian. Before we move to Q&A, a quick summary on Westwing. 2021 was another year of increasing in scale and reach. We processed more than 4 million orders and are serving 1.7 million loyal active customers in Europe. We have grown to EUR 522 million in revenues at a strong growth of 21% year-over-year, on top of a high baseline from last year, while also realizing EUR 40 million in Adjusted EBITDA at a margin of 7.7%. The huge home and living market of EUR 120 billion is still very early in e-commerce, and we are size-wise tiny compared to the huge opportunity in front of us. Our business model focus on loyalty remains unparalleled, with 80% of orders from repeat customers.
We are strongly growing our private label products of the Westwing Collection, where we sell gorgeous best sellers at good prices and for us, fantastic margin. We have an attractive target P&L, and we have a very strong cash profile, with a net cash position of EUR 97 million as per end of last year and a low CapEx ratio. To inspire and make every home a beautiful home. With that, we're now happy to take your questions.
Dear ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speakers, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. We have a first question. It's from Volker Bosse, Baader Bank. The line is now open for you.
Yeah. Hello, gentlemen. Good morning, Volker Bosse, Baader Bank. Thanks for taking my question and thanks for the information provided, especially the EBITDA margin bridges. Very much appreciated. First question would be on clarification. You said minus 20% sales. Was that a figure for Q1 2022, basically? An indication on a first quarter sales performance, please?
Yes. Let me just briefly answer that. Yes.
Okay. Yeah, yeah, cool. This means then for the full year, as you said, -12% to +5%, means basically in the first half, a double-digit negative sales decline. Then you said for the second half, a kind of normalization. Normalization, is it right to assume if you say normalization means 10%-20% sales growth? Basically double-digit down in the first half and then 10%-20% growth in the second half, just to see the seasonality, which underlines your yeah full year guidance. Thanks.
Yes, Volker, let me answer this. I think what you said is basically it's the right direction. I think the range we have given is quite wide as we also don't know exactly how the second half will develop, but I think what you have described is in line with what we also see. H1 being down double-digit, probably something that like we have seen in Q1, maybe slightly better than in Q2. Returning to positive growth rates in the second half. Depending whether they are kind of very high towards the twenties, probably then we go to the upper end of our range. If they are lower, we'll develop to the lower end of our range.
Okay, got the message. Thank you. Regarding gross margin. Sorry. Is it fair to assume a gross margin increase in 2022 on the back of the Westwing Collection? Yeah, higher sourcing costs counterproductive, of course. Yeah, gross margin, please.
Yeah. I think also on the gross margin, we see something like a V. Basically there are effects that dragging us down. We will, for the first full year, see the container cost impact that we have only seen-
Yeah
... the second half in the previous year. On the counter effect, we see kind of basically increasing Westwing Collection share, as you said. I would expect yeah, slightly lower levels than we have seen in 2021 for the gross margin for the full year 2022.
What is your CapEx for 2022? Is there any indication?
Usually we have CapEx around 3%, and this year it might be 3%-4% of revenue, so roughly around EUR 20 million.
Yeah. Okay, cool. Marketing cost, your target is 9%-11%. You're at 9.4% in 2021. Now, given the potentially lower top line, does it mean that marketing cost as a percentage of sales are going up more to the range of 10% then? Or how you look at marketing point of time?
Yeah, I think, yeah, I mean, we are always shifting also investments between the lines as this is, but you can expect marketing to be in the range of -9% to -11%, or 9% - 11%, but I would probably plan for the middle of that range at this point.
Yeah. Okay. The final one is then on fulfillment costs, I guess. We expect a rise here given the price increases and the supply chain disruptions that can pressure fulfillment costs to develop negatively year-over-year.
Yes. Yeah. I think there are two main effects. I think one is basically that we expect higher freight costs, so that's driven by inflation for the
Oh, yes.
for the drivers, but also on the energy prices.
Yeah.
The second is that we see negative scale on our warehousing costs due to kind of the top line guidance we have given, and the investments we have made also in warehouse capacity to fulfill a larger top line.
Okay. This is from me for the first round. I jump back in the line and all the best. Thank you.
Thank you, Volker Bosse.
The next question is by Christian Salis, Hauck & Aufhäuser. The line is now open for you.
Hey, good morning, everyone. Thanks for taking my questions. I have a couple of questions on the gross margin as well, and on the contribution margin. Could you remind us, please, on the price increases you have done over the past six months, and could you share also some feedback on how the consumer reacted to this?
Yeah. We increased prices approximately on the Westwing Collection by 10%-15%. But we haven't passed on all our additional costs from transportation and sourcing to our customers. That's why margins are a little bit affected. What's the reaction of customers? I mean, obviously customers don't love prices, but that's the advantage in the market with relatively transparent price structures and the brand that we have built. We don't think that that is a negative driver on demand. We think that demand is more affected by the bigger macro environment. You know, in the last year, when we already had increased the prices through the year, we obviously had even overdemand and couldn't catch up with inventory. That's kind of. That's not the case anymore.
Overall, we think that's a good strategy to increase prices in such an environment, and we did.
Okay. Are you planning further increases in 2022?
We're not sure yet. This is something that we wanna watch. We feel that prices have increased a lot. We also think that some of the temporary effects might go back again, but you know, take for instance, wood, the effect on wood prices from the war are still to be seen. If that's a strong effect, we might need to further increase prices to protect margins.
Okay. Then on the inventories, the inventory level increased quite a bit to more than EUR 50 million in 2021 versus EUR 30 million last year. Do you see any markdown risk here going into 2022?
Not structurally and not significantly. The good thing is that we mostly take inventory on best sellers. Our business model is not as seasonal as, for instance, fashion and we don't have perishable inventory. The biggest effect is rather on the fulfillment cost side, where our warehouse costs are affected. We will have some kind of technical write-offs on some of this inventory, but nothing that you know strongly factors into our results for the year. These are temporary inventory buffers. Some of them we deliberately took, and some of them are now a bit higher even than we had planned, given the lower consumer demand. Again, it's-
Mm-hmm
... it's almost all of them are best sellers. Sebastian, any comments you have?
Okay. No, I think absolutely, Tor.
Yeah.
I think, unfortunately you're gonna see kind of still the effect of this for the next couple of quarters. Until then, we believe it will normalize again. I think-
In cash, right?
In cash.
Yeah.
You're gonna see.
Yeah
further high inventory levels, at least till Q3 this year.
Okay, cool.
Another one.
Balance sheet issue, yeah, than a margin issue. Yeah.
Okay. Then on your two themes on the daily theme business and the permanent assortment. Could you please provide a bit more color on how these two models are working at the moment, and are there any differences in consumer behavior for the two models that would be interesting?
Nothing fundamentally. I think both models cover the full spectrum of home and living categories. We don't see any deviations that are different between each other. Also, the way they work, right? We get most of the traffic through our organic marketing channels, our newsletters into the daily themes, and then from there, the traffic goes into our permanent assortment and Westwing Collection. Also the way the business model works is that we would see similar behavior of both business models. What we do see is a further increase on the Westwing Collection as we've described. That's a strategic kind of initiative that we push by extending categories, by pushing best sellers, by focusing on marketing more on that. That's a deliberate strategy across both business models.
Do you see any difference in the accessories business versus the larger furniture? Because the larger furniture might be more affected by the slowdown in discretionary spending due to the higher price point.
Not right now. That could happen.
Okay.
Right now we don't see that. The category mix has not strongly changed. This is the same answer, but on the other side, that we gave through 2020, right? When kind of the massive sudden increase in demand happened, that was also across all our categories. This might be our business model, that the way we sell it, we sell it in an integrated way. I mean, if you've been on the site, we typically don't sell like furniture separately. It's integrated into campaigns where also accessories, smaller items are. For us, it's just typically a general movement across all categories.
What we do see is a slight, but that's a long-term increase in our large furniture share, given the Westwing Collection is a little bit weighted towards large furniture because we haven't developed accessories for the Westwing Collection yet. That's going to happen this year. But that's a material shift, a few percentage points and long term. Short term, we don't see any category specifics.
Okay. Then final one, just a technical one. The adjustment on the EBITDA in Q4 was negative, I think. Could you please provide some guidance for 2022 on this item, please?
Yeah, I think they were negative due to the factor that we normalize for. The biggest position that we normalize for is share-based payment. Given that some of our programs are cash settled, and also some of the programs we have reclassified this year for the first time from equity settled to cash settled due to historic cash settlements we have done. They fluctuate with the share price development. As share price went down in Q4, basically kind of the liabilities for those programs have reduced, and we show an income on the balance sheet. That's why we also believe we wanna adjust for share-based payments because they are like movements that are not related basically to the business, and we steer kind of pre- those movements.
It's also hard to predict how they're gonna develop next year, right? Because then I would need to have the crystal ball for the share price development.
Assuming the share price stays at the current level, what would be the number round about?
I don't know off the top of my head. I have to
Okay.
I will give it to you.
Okay, fair enough. Thanks, guys.
Thank you.
As a reminder, if you want to ask a question, please press zero and one. Our next question is by Volker Bosse, Baader Bank. The line is now open for you.
Yeah. For the question, I take the chance. Could you please elaborate on your Westwing Studio? It's a bit of new topic, so to say. How does it work? How many people are involved in that program? Is it in-house or done by suppliers? And how does it work? And second, also on Westwing Delivery, you just started in Munich, now in Hamburg. Berlin is to come. How many employees are in that section now? Thanks.
Sure. These are super exciting parts of our business. On the studio side, that's an in-house program. The team is roughly 30-40 people, in-house interior designers that we hire and train. They basically talk to the customers on the phone. We have a network of some graphic artists that are freelancers that help us produce the 3D imagery for these beautiful concepts that the customers get. The process works, the customer books the service, fills in a questionnaire on our site. There's a first consultation with one of our interior designers over the phone or FaceTime or something like that. They upload pictures of their empty room or their currently furnished room. They then in the phone call have a discussion on kind of what the customer wants.
Our interior designer goes into our catalog, and prepares what would work, and then gives it to a graphics designer, typically a freelancer that then produces the room. This is shared with the customer. There's another call. There might be some small adjustments, and then the customer gets the shopping list. That's kind of the end of it. Typically what we see, as we said, is then within the next 12 months, the customer orders for EUR 2,000 on average.
Mm-hmm.
That's pretty good kind of sales support program. We're expanding that as we speak. We're also testing things like, for instance, we have an office in Berlin, we have an office in Munich, we ask customers if they wanna come by. A few customers actually came by to have discussions. We already tested going to customers' home. We're testing this, but kind of the rough process is the way I described. We think that's a great way from a CX for the customer to profit from our experience and our expertise. That's purely insourced and kind of because we need to control the experience. On the delivery service, the same insourcing applies.
While we love our delivery partners, it's, for us, on several fronts, much easier for large furniture to deliver this ourselves for 2, 3 main reasons. Number one-
Mm.
When we assemble, and a lot of that furniture needs assembling, our drivers, they know our furniture, right? The Westwing Collection doesn't have that many items. So they are really fast. They're really good. We can also have a custom experience that's a little bit better than what we typically get. For instance, our drivers, they put on like slippers over their dirty shoes before they enter a customer's apartment. If there's any question from the customer, we can directly connect them to customer service or even an interior designer in the room. So there's kind of this integrated experience that is very hard for our great partners to do. That's why customers love it, and that's why we're rolling it out. You know, for now, we just opened Hamburg.
So far, it also works pretty well. If we see that the business case on this, what we observe is slightly lower return rates, calculating the business case on that, what we observe is obviously super high customer happiness. You know, if that turns out after having opened Hamburg, Munich, and Berlin to be a very positive business case, we can foresee a really rapid rollout of this across Europe and the major cities. If, or we need some more time, we're not rushing this because the customer experience is much more important.
Yeah. Good message. Thank you very much. Thanks.
There are no further questions for the moment, and so I hand back to you.
Thank you very much. Thank you very much for attending our call and looking forward to speak to you individually over the coming days. On the next earnings call, we see you. Thank you very much. Bye-bye.
Thank you. Goodbye.
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