(News Bulletin 247) – The title of the furniture distribution specialist lost further ground on the Paris Stock Exchange on Wednesday, weakened by its profit warning launched at the start of the week. For TP ICAP Midcap, it is still too early to position itself on Maisons du Monde stock.
Maisons du Monde is falling again after its major profit warning launched Monday evening. The title of the furniture distribution specialist fell another 5.8% to 5.75 euros around 12:18 p.m. this Wednesday, bringing its decline to just over 50% since the start of the year.
Maisons du Monde had nevertheless closed in the green on Tuesday (+0.9% with a peak of +4.2% during the session), which was not necessarily won given the sharp drop recorded in the first exchanges (- 9% at 9:30 a.m.). The reaction of the stock therefore suggested that the market anticipates a return to better fortunes for Maisons du Monde, and that the time is therefore opportune to revisit the issue, underlines Wednesday morning TP ICAP Midcap in its latest note devoted to the stock.
Catching a falling knife?
“A tempting premise given the valuation but which still seems too hasty to us,” tempers Florent Thy-thine, head of equity research at TP ICAP Midcap, who renews his sell recommendation and his price target at 5.8 euros. . The conference call on Tuesday morning did not “really reassure” the specialist in several respects.
Certainly, Maisons du Monde is dealing with an economic environment that is reducing its efforts to encourage its customers to return to its stores. 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.
And it largely explains the lowering of the 2023 targets. However, Florent Thy-thine believes that the underperformance of Maisons du Monde in recent quarters “still suggests that it is losing market share” .
So to win back its customers and preserve its profitability, Maisons du Monde plans to present a strategic plan in the first quarter of 2024. But for TP ICAP Midcap, this new roadmap could be a source of disappointment. “Indeed, given the environment, the group should make prudent assumptions leaving little room for investor enthusiasm for this plan,” notes Florent Thy-thine.
Yet another new financial director
A plan which precisely recalls the analyst, will a priori be developed without a financial director, the time for Maisons du Monde to find the successor to Régis Massuyeau who announced his departure from the company at the end of last August. This will be the third financial director appointed in four years, TP ICAP Midcap noted after this announcement.
Another point which fuels the analyst’s caution, the responses provided by management on the group’s refinancing which he considers “not very convincing”. In November 2017, the company launched an issue of convertible bonds for a maximum amount of 200 million euros. The operation aimed to partially refinance the term loan in the amount of 250 million euros. However, these convertible bonds mature at the end of this year and with the rise in interest rates, the cost of refinancing should therefore weigh on the accounts in 2024.
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