(News Bulletin 247) – The research office TP ICAP Midcap has returned to selling on the stock, before the publication at the end of the month of the third quarter turnover which it considers to be “risky”. The stock plunges on the stock market to get dangerously close to its March 2020 lows after the confinement announcements.

With purchasing power eroded by inflation, households are focusing on purchasing essential products. And therefore ignore so-called discretionary consumer goods like furniture. A context which should further weigh on the activity of Maisons du Monde between July and the end of September.

This is what TP ICAP Midcap predicts, which estimates that the next publication of the furniture specialist, scheduled for October 26 before stock market trading, will be at “risk” with a “possible calling into question” of the objectives for the entire sector. ‘year.

The financial intermediary thus returned to selling the stock this Thursday morning, with a price target reduced to 6.7 euros compared to 9 euros previously, estimating that the pressure on the stock “could further increase in the coming weeks.”

No “good surprises”

This deterioration logically weighs on Maisons du Monde which shows one of the biggest declines on the Parisian market with a fall of 15% this Thursday to 6.16 euros. Only Alstom, in turmoil after warning about its cash consumption for its financial year ending next March, is doing much worse (-37%).

For TP ICAP Midcap, the third quarter of Maisons du Monde should not bring any “good surprises”, quite the contrary. Furniture sales certainly increased by 9.4% in the month of July, according to data from the Banque de France. But this progression is linked to the delay in the sales period, recalls Florent Thy-tine from TP ICAP Midcap. After this month of July which “created an illusion”, “the months of August and September should bring a harsh return to reality”, the design office wishes to warn.

The financial intermediary has thus revised its revenue projection for 2023, anticipating a turnover of 1.129 billion euros for 2023, compared to 1.151 billion previously, which implies a decline in activity of 9% in the third quarter, in line with the first half. Between January and July, the group’s sales fell by 11.4% year-on-year on a comparable basis, while operating profit plunged by 42.6%.

For its part, Maisons du Monde still expects a drop of between 3 and 5% (low-to-mid-single digit) of its sales. The objective announced by management therefore implies an improvement in sales in the second half.

However, for TP ICAP Midcap, the current context makes it difficult to maintain its objectives since the growth rate announced by Maisons du Monde “would require growth of more than 5% in the fourth quarter to achieve a decline limited to 5% over the financial year 2023”. On the profitability front, caution is also required: “we were already below the group’s objectives and are still revising our current operating income downwards, impacting our 2023 earnings per share by -16%”, underlines TP ICAP Midcap.

The group has stepped up initiatives to bring its customers back to its stores as part of its 3 C plan (customer, costs and cash). Maisons du Monde announced this summer new reductions applied to 400 of its references to make its products accessible to as many people as possible. The furniture brand has just made its return to television after eight years of absence with a new advertising film, notes the media specializing in consumption LSA.

In addition to these initiatives to revive its commercial dynamic, Maisons du Monde is attentive to its expenses to limit the erosion of its profitability. The group is aiming for an annual cost reduction objective of 25 million euros, which involves “dynamic management of its store network”, in other words store closures. And for TP ICAP Midcap, “the group’s work on the cost structure seems to be bearing fruit” and therefore to be beneficial to profitability which “could prove more resilient than sales”.

But the group had to face a new defection in its teams at the end of August and not the least since it is quite simply the financial director, the pilot of this 3 C plan. “A third financial director in four years will therefore be appointed soon “, noted TP ICAP Midcap in a previous note.

For the following year, Florent Thy-tine considers that the start of 2024 could still be under pressure before a return to growth during the second half of 2024.

Since the start of the year, Maisons du Monde shares have fallen by 43.7%.