(News Bulletin 247) – The designer and online distributor of furniture and decorative items is jumping on the Paris Stock Exchange. Investors are pleased with the announcement of a return to profit at the end of its staggered 2023-2024 financial year ending at the end of April.

At the start of the year, the Miliboo group caused a sensation by publishing robust first-half accounts, which correspond to the period covering the months of May to October 2023.

The Haute-Savoie specialist in the design and sale of “trendy” furniture, which can be adapted and personalised on the Internet, had reported record activity for its first fiscal half-year and a return to a high gross margin, above 60%. Its share price had risen by 14.5% on 28 February, the day after Miliboo’s publication.

Annual accounts back in the green

This Monday, the market reacted once again favorably to the latest publication of the group created in 2005. Miliboo shares rose another 10%, after having jumped 22.5% in the morning. The clear improvement in the accounts was confirmed for the entire financial year ending at the end of April, which is quite an achievement in a sluggish furniture market.

The furniture specialist reports that it has achieved a turnover increase of 2.3% to 43.3 million euros over the entire 2023-2024 financial year, which ended at the end of April. Miliboo specifies that this is the highest level of activity achieved since its creation in 2005.

The group explains that it benefited from an increase in the average basket, which made it possible to offset a 3.9% drop in volumes over the year. Miliboo emphasizes that this decline is “limited” compared to a 4% drop in a “sluggish” market, according to figures from IPEA (Institute for Prospective and Furniture Studies) for the period from the end of March 2023 to the end of March 2024, cited by the company. Sales in France, which represent 85% of Miliboo’s turnover, are up 2.2% to €37.2 million, while international activity is up 3.4% to €6.1 million.

The gross margin increased significantly over one year, from 54.5% to 61.4% in 2023-2024, thus exceeding the 60% mark for the first time since 2020 over one year. The company attributes this strong increase in its profitability to “rigorous management” of its operating expenses, and to a “less tense” context on purchasing and logistics costs (international freight) than in the previous financial year.

In this context, the gross operating result (EBITDA) is back in the green for the first time since spring 2022. In April 2024, it stands at 3.1 million euros, whereas the group still posted an operating loss of 0.9 million euros in 2022-2023. Another element of satisfaction, the group is also returning to profits to the tune of 2.4 million euros, whereas it posted a loss of 1.5 million euros last year at the same time.

Regarding the outlook, Miliboo did not wish to provide any figures, citing a furniture market “still trending downwards at the start of the financial year and in an uncertain economic context amplified by the real estate crisis which is weighing on furniture purchases”.

The furniture specialist is simply reaffirming its caution “in the face of this context and the drop in volumes”, and says it is committed to managing its commercial strategy with a view to “preserving its gross margin while taking into account price sensitivity on volumes”.

Maisons du Monde, downgraded as expected

Another furniture player also communicated on its financial elements on Friday evening. This is Maisons du Monde, which published degraded half-year results but “in line” with the expectations of TP ICAP Midcap.

In the second quarter alone, the furniture brand saw sales down 9.6% year-on-year to €242 million. Maisons du Monde’s quarterly performance is in line with the expectations of the research office, which had anticipated €247 million in sales.

“The different segments are generally moving in the same direction with a more marked decline in decoration (-13% compared to -6% for furniture) and in the store network (-10.5% compared to -8% for online sales). Like many other players, the group highlights the poor performance in June,” says Florent Thy-tine, head of equity research at TP ICAP Midcap.

Management welcomes the initial results of the 3 pilot stores that were renovated at the beginning of the year, with performances “higher than double digits compared to the rest of the network”. The group adds that 70 points of sale will be entitled to a little facelift by the end of 2024.

This initiative is part of the 2024-2026 strategic plan “Inspire everyday”, announced at the beginning of the year. Maisons du Monde hopes to achieve a cumulative free cash flow of 100 million euros between 2024 and 2026, thanks in particular to 85 million euros of savings over 3 years. The furniture brand also intends to achieve a capex (capital expenditure, editor’s note) / sales ratio lowered to 3%.

This transformation plan is currently weighing on the bottom of the income statement. Current operating income (EBIT) thus shows a loss of 5.8 million euros, “as expected” by TP ICAP Midcap and the management of Maisons du Monde. Also, the group suffered a loss of 24 million euros in the first half, compared to a profit of 1 million euros a year earlier due to an exceptional charge and a deterioration in the financial result.

But this publication contains some positive elements. The gross margin increased by 150 basis points, or 1.5 percentage points to 65.3%, which constitutes a “good surprise” for Florent Thy-tine. The specialist feared a decline linked to the drop in prices but which was offset by a reduction in freight costs and the contribution of the marketplace.

He also points out that the group has managed to maintain a free cash flow that is almost balanced (-0.9 million euros) thanks to a halving of investment expenditure (9 million euros) and a contribution from working capital requirements of 8 million euros.

However, the analyst does not expect a turnaround in the second half of the year but believes at this stage that the “low point has been reached”. In a context that is not very favourable for the furniture sector, “the group has demonstrated its ability to protect cash and continue its cost reduction plan”, he continues, which leads him to raise his recommendation to buy “in view of the potential of the stock” with a target however maintained at 5.40 euros.

“We do not rule out further downward pressure on the stock, but it will be an opportunity to build up a small position initially,” concludes Florent Thy-tine.

On the Paris Stock Exchange, Maisons du Monde is doing well despite this red swing in the accounts in the first half of the year. The stock jumped 3.5% around 3:00 p.m., but has still lost more than 30% since the start of the year.