Ceconomy Stock: Mixed Signals Puzzle Investors

Ceconomy, the parent company of MediaMarkt and Saturn, has presented a contradictory financial picture in its second-quarter results, leaving investors uncertain about the retailer's trajectory. While the electronics giant saw its adjusted operating profit (EBIT) double to €10 million—marking the ninth consecutive quarter of improved profitability—overall revenue declined by 1.6% to €5.2 billion, falling short of analysts' expectations. This disappointing sales performance, particularly noticeable in German-speaking regions, triggered a share price drop of approximately 4%, with the stock settling around €3.21. Despite the revenue setback, currency and portfolio-adjusted figures showed a modest 1.3% increase, suggesting underlying resilience. The bottom line revealed a concerning net loss of €38 million, contrasting sharply with the €84 million profit recorded in the same period last year.

Digital Growth Offers Hope Amid Challenges

The company's transformation strategy appears to be gaining traction in specific segments. Online sales grew impressively by 7.4% to approximately €1.3 billion, now representing a quarter of total revenue—evidence that Ceconomy's shift from traditional retail to an omnichannel platform is progressing. Despite current challenges, management remains confident, maintaining its forecast for the 2024/25 fiscal year, which projects "moderate" overall revenue growth of 3-5% and a "significant" increase in adjusted EBIT of at least 10%. After the first half-year, the company has already achieved growth of 5.9% in revenue and 14% in adjusted EBIT, positioning it ahead of these targets.

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Source StockWorld