UBS downgrades About You on limited upside scope

ABOUT YOU Holding SE

05/10/2022 10:32

** UBS cuts German online fashion retailer About You
 YOUG.DE  to "neutral" from "buy," citing limited potential
upside following the company´s warning on the FY22/23 outlook
    ** The brokerage sees little room for revenue recovery in H2
given weak demand and ongoing challenges after weaker Q2 sales 
    ** It expects a wider FY adjusted EBITDA loss due to lower
revenue and gross margin, near-term difficulties in adjusting
operating expenditure relative to lower sales
    ** Moreover, UBS sees the company's target for EBITDA
breakeven in FY23/24 as more demanding vs the broker's estimated
adj. EBITDA loss of 3.2 mln euros for the period
    ** About You's "early mover advantage in some of the
European markets is likely to lead to it emerging in a stronger
competitive position in the midterm," the broker says
    ** However, UBS does not expect the stock to bounce back
until there is proof of some progress on sales/margin trends
    ** It cites Inditex  ITX.MC  as its preferred stock in the
sector, pointing to good sales momentum "with more resilient
profitability"
 (Reporting by Philipp Krach)
 ((philipp.krach@thomsonreuters.com))