Douglas GmbH could face zero growth in 2022
In an Interview with Third Bridge Forum, the specialist said fears of a recession are “squeezing” Douglas’ mid-market products, with customers trading down products from mid to low but not high to mid. However, the specialist was confident Douglas’ pricing architecture is wide enough that such changes “will not be a problem”.
A recession would likely hit sales of Douglas’ fragrance and make-up offerings, according to the specialist, but skincare could be less affected. A recession would also have a “severe negative impact” on Douglas’ Christmas business, which was affected last year due to COVID-19 restrictions. The decision to close 80-90 stores during the pandemic also makes things a little more “difficult” for Douglas compared to its competitors, the specialist added.
Meanwhile, the specialist said Douglas’ online channel is also unlikely to grow this year and could decline by 5%. This is despite the specialist telling us that Douglas is industry-leading “content-wise, assortment-wise, innovation-wise”. In the future, the specialist expects Douglas to earn 10% marketplace sales share from its e-commerce business in Germany.
The interview also revealed that discounts are likely to be higher YoY and that Douglas’ gross margins could lose 1 percentage point vs 2021. Other margin pressures affecting Douglas could be a rise in rent by 7-9% YoY – a return to pre-pandemic rent levels – as well as personnel costs, which could increase by 3%, we were told. The specialist said Douglas could offset these EBITDA pressures through exclusive brand innovation and private label growth – the latter of which “will cost money, but [they] need to do it”.
The specialist concluded the Interview by rejecting the possibility of a Douglas IPO anytime soon. They also do not envisage any larger brand acquiring Douglas, with no “supplier side or supplier brand” interested in buying the company.
Click here to access all the human insights in Third Bridge Forum’s “Douglas – German sales and margin outlook” Interview.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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