Duell - Catching up required after Q1 miss
Duell's Q1 figures fell short of our estimates, particularly on the top line, with sales weaker than expected in both the Nordics and Central Europe. Challenges in France are expected to affect performance throughout the year, prompting us to lower net sales estimates, while profitability should remain relatively resilient.
Expected challenges, unexpected magnitude
Duell’s Q1 net sales fell well short of our estimates in both the Nordics and Central Europe. In the Nordics, performance was hampered by low pre-orders entering Q1 and mild winter conditions, which limited seasonal demand. In Central Europe, the France brand portfolio transition continued to weigh on performance. While we had highlighted the key risk factors, the magnitude of the sales decline in both regions was greater than anticipated. Despite the double-digit sales contraction, cost control remained solid, with gross margin and OPEX in line with estimates. EBITA declined from last year but came in only slightly below expectations, demonstrating resilience given weak volumes. Inventory levels remain elevated entering Q2 and Q3. Efficient inventory management will be critical to sell through winter stock while preparing for the important summer season.
French brand portfolio changes to weigh through FY26
We have lowered our FY2026 net sales estimate by ~3% to EUR 123.7m (-2% y/y), mainly reflecting ongoing challenges in France, which are expected to weigh on performance throughout the year. Our new estimate for adj. EBITA is EUR 4.7m. Cost optimization measures implemented should help limit the profitability impact, while we expect volume recovery to be gradual. Outside France, we expect Rest of Europe to perform well, with growing presence in Benelux, the UK and Eastern Europe. The Nordics outlook remains largely unchanged for the full year, though the start of Q2 should have benefited from the winter weather, supporting seasonal demand. Performance in both regions should further improve in H2, supported by slightly easier comps, some EUR 0.4m in annual savings from warehouse restructuring taking effect, and ongoing efficiency initiatives.
ACCUMULATE with a TP of EUR 3.0 (prev. EUR 3.4)
With the downward revisions to our estimates, we lower our target price to EUR 3.0 (prev. 3.4) and retain our ACCUMULATE rating. Duell is valued at 6-5x adj. EV/EBITDA and 7-5x adj. P/E based on our estimates for fiscal years 2026-27E, offering upside potential once conditions normalize, although balance sheet risks remain elevated.