Continuously supportive product mix, price efficiency and slight FX tailwinds are expected to render a 50bp gross margin expansion. However, we fear that competition for marketing space has become stiff and we estimate higher marketing spend as a consequence. As such, our adj. EBIT margin estimates suggest a level roughly in line with Q2’20 at 8.5%. In absolute terms, adj. EBIT is expected at SEK 285m.
Estimates trimmed by ~1%
Due to a significant slowdown in search volumes, and supported by the weak trading update from Desenio, we have cut our sales assumptions for Home Furnishing by 2%, 1% and 1% in ‘21e, ‘22e and ‘23e, respectively. Consequently, our group adj. EBIT has been lowered by 0.6% to 0.9% over the coming three years. We have yet to include the HYMA acquisition into our estimates (pending approval in Q3’21e), which could add 3-4% to ’22-‘23e EPS. We have left our valuation range of SEK 88-224 unchanged, as lower estimates are offset by rollover effects.
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