Wittchen Q4 2024 slides reveal sharp profit decline amid European expansion efforts

Introduction & Market Context

Wittchen SA (WSE:WTN) presented its fourth quarter and full-year 2024 results on April 10, 2025, revealing significant profitability challenges despite relatively stable revenue. The Polish luxury leather goods and luggage retailer, which has been expanding its European footprint, reported a sharp decline in net profit amid rising costs and competitive pressures.

The company’s stock closed at 21.05 PLN on May 22, 2025, significantly below its 52-week high of 35.70 PLN, reflecting investor concerns about the company’s performance trajectory.

Quarterly Performance Highlights

Wittchen reported fourth-quarter revenue of 133.1 million PLN, a marginal increase of 0.6% year-over-year. However, profitability metrics showed substantial deterioration, with EBIT falling 35.1% to 16.8 million PLN and net profit plunging 57.1% to 8.9 million PLN compared to Q4 2023.

As shown in the following financial results summary, gross profit margin declined by 3.4 percentage points to 61.5%, while EBIT margin contracted sharply from 19.5% to 12.6%:

The company’s sales channels showed divergent performance. Offline store sales grew 3.5% year-over-year, driven by the expansion of international locations. However, e-commerce sales declined by 3.5%, reflecting weaker consumer demand in digital channels. B2B sales provided a bright spot with 10.6% growth.

The following chart illustrates the quarterly sales trends across different channels:

Gross profit margin, while declining year-over-year, showed a seasonal rebound in Q4 compared to Q3. The company cited periodically increased freight costs and strong market competition as factors affecting margins:

Full-Year Financial Results

For the full year 2024, Wittchen’s results fell below management expectations. Revenue declined 2.8% to 454.2 million PLN, while net profit dropped 44.1% to 34.2 million PLN compared to 2023. The gross margin for the year stood at 61.8%, down 1.7 percentage points.

The comprehensive financial summary for 2024 shows the extent of the profitability challenges:

Cost pressures were a significant factor in the company’s performance decline. SG&A costs increased 4.5% for the full year, with rental rates rising 9% and HR costs per square meter surging 21% year-over-year. These inflationary pressures on operating costs contributed to the compression of profit margins.

Strategic Initiatives & Expansion

Despite profitability challenges, Wittchen continued to pursue its European expansion strategy. The company operates through a multi-channel approach, with 54 online stores (including 8 own e-commerce platforms and 46 marketplace partnerships) and 115 physical stores across Europe.

The following breakdown illustrates Wittchen’s omnichannel sales structure:

Geographic expansion remained a key focus, with 5 new stores opened in 2024 across Austria, Germany, and Romania. The company now has a presence in 24 European countries, with plans to optimize its marketplace network in 2025.

This map shows Wittchen’s current European footprint:

Product diversification is another strategic priority. While luggage remains the company’s main product category, its share of sales decreased from 52% in 2023 to 48% in 2024. Meanwhile, clothing and accessories increased from 13% to 16% of sales, reflecting the company’s efforts to broaden its product range:

Forward-Looking Statements

Looking ahead to 2025, Wittchen outlined several initiatives aimed at improving performance, including enhancing sales and marketing effectiveness, optimizing marketplace partnerships, and developing sales in newly opened international stores.

The company identified opportunities in building its brand abroad and expanding its product assortment on marketplace platforms. However, it also acknowledged risks from weakening consumer demand, supply chain volatility, and intensifying competition, particularly from Asian sales platforms.

Management emphasized that despite current challenges, Wittchen remains a profitable company with the goal of returning to an upward growth trend. The company maintained its shareholder-friendly approach, declaring a dividend of 3.57 PLN per share, representing a 10.8% yield.

In summary, Wittchen’s Q4 2024 presentation reveals a company navigating significant profitability pressures while continuing to invest in geographic expansion and product diversification. The coming year will be crucial in determining whether these strategic initiatives can help reverse the negative profit trends experienced in 2024.

Full presentation:

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