elumeo SE
XETRA:ELB
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1.86
2.98
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
elumeo SE
You don't have any saved screeners yet
Welcome to the conference call of elumeo. At our customers' request, this conference will be recorded. May I now hand you over to Mr. Wolfgang Boyé.
Good morning to all of you for the earnings call for the Q1 results in the year 2020. I'm here together with Bernd Fischer and Florian Spatz, and we are going to guide you through the presentation that we have prepared in order to summarize the key developments throughout the first 3 months in 2020. But moreover, also to some of the first results that we see going into Q2, which, for the future development in year 2020, are quite important, as they start to shed a little bit more of light on how elumeo will be able to cope with the COVID pandemic in 2020 financially. The key developments are to begin with as all of our other businesses, obviously, COVID-19 has had a major impact on the business of elumeo, in particular, in the first quarter. We have had first shipments that have been canceled that were planned for our sales already in February of 2020, so pretty early on. This is not much of a surprise as we have a very densely integrated supply chain across numerous destinations. Pretty significant part of all of the rough gemstones that we purchased are being cut in China. And obviously, once cutting is interrupted, then also the production of jewelry starts to be interrupted. And we have been hit by this in the beginning of February, pretty much out of the blue, and we did not expect a breakdown of our supply chain of that speed. And therefore, we have had to adapt the entire business in the course of roughly 4 weeks to the situation. This has led to a situation that in the [ third ] quarter, unfortunately, we have not been able to continue our profitable development that we have seen in the fourth quarter of 2019. We've been able to improve our results slightly, but a lot less than we had originally planned. Our segment EBITDA rose from a loss of EUR 1.4 million to a loss of EUR 1.1 million. But obviously, our original plan assumed that this was going to be a profitable quarter just as the profitable fourth quarter of 2019. Due to the fact that we have been hit by this so early on, we have also been able to prepare solidly in order to cope with the pandemic as good as possible, and we started implementing first measures here in Germany as of the 1st -- 2nd of March, when we started to shift most of our office work from the office to home office. And then in April, we had a pretty more comprehensive or bigger change in the entire structure of the company, which is that we split off all of our shift into separate groups and we also reduced our daily broadcasting from 18 hours to 12 hours, which has resulted in a pretty significant cost reduction of our operational costs starting of the first -- starting with the 1st of April 2020. We also had to regroup our entire supply chain because starting in April, basically, we had 2 out of 3 production destinations in lockdown: India; and China. And Thailand was producing at something like 50% capacity. So all of our production hubs basically were affected by the lockdown, and we had to regroup this. Fortunately, for us, there were quite a few possible partners that we could cooperate with, who were significantly affected by the lockdown in retail in Europe, and had substantial overcapacity. So we were able to shift this, which took us a little bit of time to do this, supply chain that is so complex as ours cannot be changed from 1 day to another, but mid-April -- towards the end of April, we have been able to adapt our supply chain to the situation. And this has helped us to get back to a profitable development in the second quarter, which is something I'm going to show you a little bit more in detail later. Our webshops and also our entire customer demand has been enormously stable throughout the entire pandemic. So after a very short first kind of level of hesitation that we have seen in March, we continuously see very strong demand in our products. So the predominant topic for us at the moment is not so much how to sell, but more how to produce. Because we are effectively able to sell substantial amounts to our existing and new customers, and that is something that you will see also in the development of our webshops, who almost doubled from the first quarter of 2019 to the first quarter of 2020. And based on this development, you may recall that we have been enormously cautious with our outlook for the year 2020 when we published our full year figures. Because at that time, we still had a very low level of visibility on how this was going to unfold. Throughout the last weeks, we have been able to get a much better view on how 2020 might develop. And it looks at the moment as if it's not going to be as bad as we originally feared and this is why we have adapted our outlook for 2020 and raised our expectation for segment EBITDA moderately. So as it stands at the moment, it looks as if it's not going to be as bad as we feared, but probably a lot better. On Page #6, real quickly, I've shown you again a page that we have had already in our full year numbers. Not surprisingly, the immediate reaction to many jewelry customers was not buying any jewelry anymore, because jewelry, obviously, in a pandemic is a product that you don't immediately need. So in March, the overall demand in the jewelry segment fell by 50% and -- in all jewelry sales online. That is something that we have not experienced. We have experienced the contrary. So since this is online webshops only, we would have to compare this with our own web shop and our web shop grew dramatically also in March 2020. So at the moment, we are gaining market share against the competition, which is a very good news for elumeo. In total, our reaction to the COVID-19 crisis, focused on 3 core measures: The health care situation; cost reduction and cash management; and revenue and margin improvement. And we are, at the moment, a little bit in between blocks, the block on the left side and the block on the right side. So we are a little bit in between the immediate COVID-19 reaction and the long term transformation. Not surprisingly, we have been using this crisis in order to increase the speed of the transformation of our business from a pure television station to an integrated multichannel player that serves jewelry lovers across all our platforms, and that is something that we have been able to accelerate over the course of the last month, in particular, because also our customers are going along with us on this transformation and have changed some of their buying habit. Just real quickly, health care measures that we have set in March were basically to split our entire company into separate groups of shifts, so that this shift operates independently of each other. And therefore, there is no risk that one shift gets infected, and then the entire company needs to get closed down. We have a number of departments where this is of predominant importance. Number one, our warehouse, where we have a dense area with people, and we have had to do a number of organizational changes in order to make sure that these areas operate as independent from each other as possible. So that we do not encounter an infection there, which up until now also has not happened yet. Same problem is in our customer service and call center. There have been -- in China, numerous call centers where there have been hundreds of infections in 1 call center. And so very early on, we took drastic measures in order to prevent this, which is that we not only split the call center into separate groups, but also we split our call center across, at the moment, 7 total locations. So it is basically split into various areas in order to make sure that people don't get infected. And that, together with the decrease of 18 to 12 hours, which has resulted in a very substantial reduction in our cost base with immediate actions.Now at the moment, we are looking more at a long-term transformation. Our current COVID reaction is essentially to say, we will have to live with this virus for at least another 12 to 18 months. And therefore, we will need to make sure that all of our processes in the company continue to operate under the assumption that the virus is there and that we will always live with the threat of having one infection that should not spread across the employees of the company. So far this works very well. Further, long time transformation is that we are currently pushing very dramatically in order to increase the speed of digitalization of the company, and therefore, improving our cost base further by automating some of our processes. I think together with the Q2 numbers, we will be able to shed a little bit more light on how much operational costs we will be able to save based on what we're doing there at the moment. Clearly, this will not be another EUR 6 million operational cost as we have been able to save last year, but I think we will be able to optimize our cost base further. And at the end, also very important on the revenue and margin side. We've been able to gain substantial grounds there already in -- towards the end of Q1 and throughout Q2, as you will see on the next slide, in order to then -- hang on, hang on -- in order to further push this forward, at the moment, we are pushing in 2 fronts on the revenue and margin side. The first is that we are introducing a much more dedicated VIP customer service in order to serve the best customers that we have even better. And this, in the past, has always been a great focus, but we have never had a separate organizational unit across all functions of the company that takes all of these efforts together, which is something that we have created towards the end of Q1. And so far, the results of these actions have been very promising. And then we could see as point number two that our client base, which is a middle-age client base that if you look back something like 5 years was not yet enormously online, starts to get more and more online and also starts to get social more and more. And therefore, we are currently pushing very much all of our presence in social media in order to have a comprehensive offer to these clients and also to be able to gain new clients in this field. Just as a summary of the development of the company in terms of margin and revenue, and you have seen this slide many times in the past, which is one of the most important tools that we use in order to manage the operational performance of the business. You can see the huge dip in revenue per minute that we have seen in February and March of 2020 and also the dip in margins that we could see. This was a direct result of the fact that in Q2 and Q3, our supply chain didn't perform the way it is supposed to perform. It is clear that we have -- when we have roughly 1 week to manage a shipment that has not been delayed, but terminated altogether. This is in our supply chain, something that is very tricky to manage. And the shipments that were delayed were the shipments that were most important to generate sales. So shipments that were done for -- were planned for specific shows with specific targets, many of the shipments had been announced or many of these shows had been announced now in magazine already, and we had then to cancel them. And this took us roughly 6 weeks to adapt our supply chain to this, which you can also see -- where you can see that in April, our revenue per minute already was on the rise again. And also the margins were starting to get back to a very profitable level, which has resulted essentially in a much improved performance for April and May. In mid-April, we returned to profitability and also in May, we have stayed profitable. For June, obviously, it's completely impossible to say how the result of June will be precisely today. But we have 1 data point. Most of you know that the Juwelo birthday is the most important day in terms of sales throughout the entire year. We've had our birthday yesterday, when I got up in the morning at 7:30, I immediately had a very bad feeling, because it was perfect weather, great sunshine, blue skies, everything was great. We didn't really meet a day in which everybody is out in the garden at the moment, but that actually was incorrect. And we had from the first minute at 8:00, we did our birthday according to our traditional schedule of 18 hours, so from 8:00 in the morning to 2:00 at night. And from 8:00 in the morning, we had our viewers interacting with us, and they were cheerful. They sent us e-mail saying, great that you are around, and this gives us great comfort. And we are happy to have you. And I'm happy to say that in terms of demand margin for the entire group, yesterday, as compared to past birthdays, this is the best result that we have had on a birthday since 2014. So it's quite some time ago that we have had such a good birthday, which I think gives us great comfort that we will be able to continue to manage this crisis properly and emerge out of this crisis stronger and better than before. So I would now like to hand over to Florian Spatz, who's going to guide you through the performance of our webshops in the first quarter.
All right. Good morning, also, from my side. My name is Florian Spatz. I'm responsible for our web sales. And as Wolfgang said, will guide you through the web performance of quarter 1, 2020. So as you can see on Slide #9, webshop revenue and margin and -- grown very strongly in quarter 1 compared to -- 2020 compared to quarter 1 in 2019. We see a plus 87% in revenue and plus 79% in margin. Of course, it's important to say that this growth is not only reflecting the good performance of quarter 1, 2020, which was a record quarter despite corona. But it is also showing the effect of several optimizations we already did in 2019, which only started to show a positive effect in the second half of last year. So it's important to know that we are comparing a quarter full of optimizations to a quarter where we didn't have all these optimizations yet. And on the right side, you can see the main growth driver that can be grouped into 2 categories. One is general online marketing optimizations, resulting especially in an increased number of new customers, as we will see on the next slide. And the second group is general improvements of website usability and the general shopping experience in our webshops, resulting especially in an increased revenue per customer. On Slide #10, we can see that the amount of new web customers clearly increased in quarter 1, 2020, compared to last year's quarter. Last year, the focus on online marketing was to identify and optimize the weaker online marketing campaigns. And this allowed us to shift the budget to the more profitable online marketing campaigns, and therefore, in 2020 to increase the pace with the paid traffic channels and also with our SE optimizations. And this results in a slightly increased sales and marketing expenses, 18%. But at the same time, it clearly increased a number of new web customers with plus 32%. I think there's still a lot of potential, especially in the organic traffic, and I'm quite confident that we will be able to further increase the number of new customers in the upcoming quarters. On Slide #11, we see that the average revenue per customer per quarter is constantly growing since quarter 1, 2019, with every successfully released new shop feature. So basically, this means that we are able to make the shop more and more attractive for our existing customers, but also, of course, to our new customers. And on the right side, you can see some examples of the new shop features. So of course, we have the products videos from our TV live show that we implemented as on-demand streaming service. We have the augmented reality that allows to virtually try on jewelry from home via an AR function. We -- last year, we had a KPI based product sorting. Since 2020, we now have first step towards the personalized product sorting showing customers recommended products based on their shopping history. And finally, we have, of course, interactive gamification elements that give customers always a good reason to regularly come back to the shop and see if there's something new. And I think the positive trend shows that this strategy is working quite well. And finally, on Slide 12, we see the outlook on our development -- web development priorities. As I already says in the presentation of our annual report, our development priorities are based on 4 main online marketing trends, personalization based on big data, the increase of social media commerce, the use of video content, and the increase of smartphone sales. We are making good progress on all 4 trends. For example, as I said, we released this new sorting based on the customer history, which is the next step towards fully personalized web shops. We also launched several social media activities, where we developed in-house influencer and make use of our expertise in jewelry. We are continuing to create platform-specific online video content. And finally, regarding the smartphone sales, we released some changes in the payment process on mobile that makes it easier to pay with a mobile phone. And already in May, we see that we were able to increase the checkout completion rates by 10%, simply by optimizing the general payment on mobile. So in conclusion, I would say that we are in a very good way, and I expect continuously good development in the upcoming quarters for our best performance. So that will be everything from my side regarding web performance. And I would now like to turn the floor to Mr. Bernd Fischer.
Well, good morning, also from my side. I will guide you through the financials, and we're going to start with Page #14. Starting with the segment EBITDA with the results compared to Q1 2019 and Q1 2020. Despite the fact that what Wolfgang already mentioned and pointed out, we struggled in the first quarter due to the lack of products and adopting the supply chain due to the corona crisis. We have been able to nevertheless improve the results compared to previous year. On Page 14, I will explain quickly the structure and the content of the particular rows. We have on the -- each on the left side, the segment information, which is the revenue as well as the gross profit and costs for the, let's say, German branch, including all the broadcasting of the German signal into other countries in particular for 2020, also to Italy. So if you look at the first quarter 2019, so we have the segment information with EUR 10 million of revenues and EUR 4 million of gross profit and EUR 1 million segment EBITDA. On the -- in the role of local sales division in Italy, this is the Italian TV business from Q1 2019, including revenue of EUR 1.8 million, gross profit of EUR 800,000 and a loss for the first quarter of EUR 360,000. So if we now compare this to the first quarter 2020. First, looking at, again, the local sectors in Italy, you can see there's basically no revenues, just some last returns of a couple of customers that happened in 2020. So basically, no sales or gross profit and also no costs. So we were able to basically eliminate the loss of the sales division in Italy compared to the last quarter. And the gross profit for the segment information of the -- basically, in the Germany, including in 2020, also TV sales for Italy. The gross profits grew quite significantly, also partly the selling expenses. However, the segment EBITDA remained stable. So putting all together, our segment information or segment EBITDA improved from EUR 1.4 million of Q1 2019 to EUR 1 million in 2020 first quarter. So the goal of reducing the loss for the Italian business worked out already in the first quarter. Also our growth in the revenue and gross profit for the first quarter 2020 did not happen as we originally planned for. On Page 15, the total P&L summarized. There is only one bigger impact I would like to point out, which is in the other operating income. For the last year, the EUR 802,000 you see here. This includes EUR 700,000 extraordinary impact for this -- for the last year, out of the deconsolidation of the U.K. entities. So that if we look at the earnings for the period of EUR 1.3 million for 2020 and EUR 1 million for 2019. This is, nevertheless, a good development. On Page 16. Just quickly, pulling out the inventories that are slightly reduced also to cater the working capital, which you will see in few minutes for the cash flow statement. And on the equity and liability side of our balance sheet, the financial debt, which is now 0. So all bank financing we had in the past are now fully paid back and up to Q1 2020. On Page 18, then the cash flow statement for the first quarter to point out that the cash flow from operating activities, again, is positive. And of course, again, driven by the decrease in inventories, mainly to fill the gap from the earnings before taxes. The cash flow from investing activities, again, low, basically on the refurbishments of the existing assets like studio equipment or smaller things. And on the second part of the cash flow statement, you will find the redemption of the financial debt, which we just mentioned about, and altogether, leading to a cash of EUR 0.5 million for the 31st of March 2020. For the outlook. I would like to hand over back to Wolfgang.
So as I said already in the beginning in our summary, when we may -- put together our finance for the year 2019, we still had a fairly low visibility on what the outcome of the COVID crisis was going to be. We had first very negative impact. We had other positive impacts. And in total, it was really tricky to gauge on how the crisis was going to unfold with us. Originally, we had planned for a pretty profitable year 2020, which obviously, due to the COVID crisis, in particular, in the first quarter was clear at that point that we were not going to be able to do. It continues to be very difficult to predict for the year 2020. And this is why in our quarterly results, we have made for the projection of 2020, and for our rates and forecast a number of qualifications in order to make sure that this is transparent. And we expect that the rest of the year will be close to breakeven or profitable based on the assumption that we will continue to operate our supply chain the way we operate our supply chain at the moment. So that there will be no additional further lockdowns from other production territories. Furthermore, we based this on the assumption that the lockdown in Germany will not be imposed in a more drastic way than the lockdown in Germany has imposed. So based on the assumption that elumeo will be able to operate this business in the way it operates its business at the moment, so employees can come to work and can perform their work, because clearly, a TV station is really tricky to manage out-of-home office. And furthermore, this is based on production or on the assumption that the measures that the German government they post in order to add businesses will continue to be in effect, in particular, that [ quarter ] will be as it is already at the moment in place, will continue to be in place all throughout 2020. And it's also based on the assumption that the Bundesanstalt [indiscernible] will actually pay out the money because up until now, we have been paying this money to our employees, and we are waiting for the bonus [indiscernible] to reimburse us [indiscernible], which obviously we will need. So as long as all of these measures will stay in place, then we will be able to do better than we originally projected, and we will have, for the full year, a loss that is only in the lower million digit area, and we will be able to improve our full year results as compared to the full year results in year 2019, which was a loss of total segment EBITDA of EUR 2.1 million. So essentially, under this -- under these qualifications, we assume that the remainder of the year, we will at least be breakeven. This is -- I have to say, and I would like to point this out also in this investor call, a tremendous result for the team of the employees of elumeo, who have been working like crazy over the last couple of 2 or 3 months in a situation in which there was an enormous uncertainty on how this was going to unfold. And it was not easy, in particular, in the beginning of the pandemic to get everybody to come to work and to risk their health going in public transportation in Berlin to come to the workplace, and I'm enormously grateful for this team that I have been working with over the course of the last months. So that everybody pulled together and said, we are going to get through this crisis. And all of you know that also the last 2 years has not been easy for the team at elumeo, and I'm really deeply grateful for the team spirit that I have seen throughout this time, otherwise, and this would not have been possible by any means. I would like now hand over back to our moderator and open the Q&A session.
[Operator Instructions] First question is coming from Mr. Volker Bosse from Baader Bank.
Volker Bosse from Baader Bank. First of all, congratulations, Juwelo. Happy birthday. And I would have a couple of questions. I would like to take the question one by one, if that's fine with you. I would like to start with your sales breakdown by distribution channels, so EUR 10 million of sales. How much of sales was generated by TV and how much by e-commerce? I understand that the EUR 2.6 million generated by the webshop showed in the presentation is just part of e-commerce. So what was total e-com sales and total TV sales in Q1?
The -- currently, for the first quarter, we don't have the breakdown compared to the classic e-comm sale, just kind of to clarify this. The number that we reported in the past, e-commerce included our app. And also our bidding agent, but will produce an updated presentation. Because we've also had a typo in our presentation later throughout the day, and we will [ show ] this breakdown.
Okay. So we receive it later. Cool. And then second question would be on sales by segment. I understand Italy is closed now. I mean, you said just returns minus EUR 7 million sales. So does it mean that going forward, you will report just in -- just 1 segment that is basically Germany? Or how can we look at the segment reporting going forward?
Yes. Going forward, we will report 1 segment, Germany. We might continue to -- or start again to show some territories there. So that you can split basically Germany, Austria and Switzerland and Italy, so that you have a little bit more visibility there. But will not reintroduce a separate segment. I think our reporting at the moment with all of the segments is complicated enough. And I think at least for 2020, we need some simplification. Till then, in 2021, we can try to shed more light on that.
Understood. Okay, cool. So there's just one production in Berlin. And then you're selling the product all over Europe, basically, but it's just shown in German, because it's shifted out of Germany, so to say, right?
We have one warehouse, one logistics China at the moment, and we ship to Europe everywhere from Berlin at the moment.
Yes. Perfect. Makes sense. What was the number of customers in the first quarter? I mean last year, I think it's 29,000-or-so, if I'm not mistaken. And what number of customers in Q1? Do you have that figure?
Yes. We will include this into the presentation as well. I'm sorry for these 2 crucial numbers, but we really finished the account at the very last minute, and this is where we did not put these 2 numbers into our quarterly presentation.
Okay. You're very encouraged about the start of the second quarter, obviously, although you did not provide any figures, but reading your words and reading between the lines, is it fair to assume that the second quarter up to now is up double-digit, so that you will be able to compensate the shortfall in sales in the second quarter so that you will be on par after H1, is that a fair assumption? Just to get a feeling what you're looking for and indicating?
I think that would be a little bit optimistic. I don't say that this is impossible, but at the moment, I would not consider this to be a realistic case. A realistic case will be that in Q2, we will be able to compensate a little bit of the shortfall of Q1, so that we will be able to improve our segment EBITDA slightly, but we will not be able, based on the information that we have at the moment, that we will return to total profitability. Clearly, the biggest increase that we have seen in Q2 was not so much the increase in revenue, which also developed nicely, but the biggest improvement in Q2 was the gross profit that we have been able to raise. And as you see on the breakdown of revenue and margins on Page #8, the biggest accomplishment in Q2 so far was the raise in gross profit margin, which is clearly also very intuitive because we have limited product supply on one side. At the same time, we have a customer base that is eager to buy, because they have absolutely no access to jewelry other than any kind of online shop, which has resulted in us being able to sell our product at slightly better prices than in the past. And so far, we see this trend continued throughout the second quarter.
Okay. Yes, we'll come back to gross margin in a second, I think. But first, sticking to the sales trend. I mean you're now -- after 13% down in Q1, you're now guiding for full year sales increase. I mean -- so after H1, you still -- you will still be down. But then in the second half, we will see a potential full effect of a recession and jewelry is discretionary spending, to my understanding. So what makes you -- you have no preorders in hand, of course. So what makes you positive that the strong sales figures, which you see in Q2 so far would be sustainable throughout the rest of the year?
That's why I said the projection for the full year is based on the fact that we continue to see the development of demand, the way we see the development of demand. First of all, our assumption of a moderate increase in sales is -- has been made based on a comparison between the German sales for the German market in 2019 compared to the sale to all of the markets in 2020. So that growth basically compares the operation that we have in Germany now with the operation that we've had in Germany 1 year ago. So that is why we have put a moderate increase there. And clearly, we thought that sales of jewelry was going to go down very dramatically as early as the beginning of the pandemic. That has not happened, and that gives us the courage that we -- or the assumption that we will continue to be able to manage this way throughout the crisis. And we have one other crisis that we can compare the current crisis, which with the financial crisis of the year 2008 and 2009. And there, we had the similar development. So continued very high demand in our products. Fortunately, for that time, and unfortunately, for this time, in the financial crisis, we had absolutely no disruption in our supply chain. So at that time, we could supply all of the demand. That gives us kind of the confidence that we will be able to continue to improve our results. But clearly, that is based on what we know at the moment. If there will be a full breakdown of all of the entire economy in Q3 or Q4, then we will be able to continue to develop the business this way.
Sure. Fair to assume that the TV will remain best case, stable, so TV sales to decline, but this should be then overcompensated by more or stronger growth in the e-com segment. So in regards to split by segments, TV down, e-com up in total, then sales slightly up? Is that your pattern?
Well, what we see for the last basically 2 quarters is first time in history that the decline that we see in the TV sales, which is -- sorry, ongoing for the last 3 years around is that the classic webshop is overcompensating the decline in TV. Also because you're asking for the e-commerce sales, including the sales from the app and the bidding agent, so those are also based on the TV live format. And the general expectation that we have for the remaining year, based on the recent couple of months is that the growth is in the majority coming from the growth in the classic webshop. So that is something, which is compared to the previous years, a novel that the classic web shop is overcompensating the decline in the classic TV sales.
Okay. And so I would like to come to the gross margin. Great achievement, strong gross margin in Q1. Although you had these disruptions in the supply chain. So looking into the rest of the year and gross margin going forward, I mean we are roughly 45% already. Last year, you had 47%. So on a total full year basis, would you expect to reach last year's level of gross margin saying the 46.8% again, so that we see a strong improvement of the rest of the year to reach that level? Or is it still too ambitious to give us a bit of feeling what their momentum in gross margin should be in the current year, but also going forward, you expect to be able to come back to these levels of north of 50% gross margin, which you had historically? Of course, some years back, but is that a level you think you could achieve, of course, looking beyond the crisis and beyond 2020?
Basically, yes. And Q1 had the impact that have been already described. And if you remember the Slide 8 from our presentation, you see the ERP margins. So the development based on the information from our ERP system, that was strongly growing, especially in April and May. So of course, as Wolfgang also mentioned already, is the expectation for the remaining year to keep that level of margins to keep that momentum, also for the main period. So this, altogether, should lead to overall margin in the P&L of around 50-ish.
For which -- you -- if you say 50-ish for year?
Yes, 50% for the year, yes.
For 2020?
Yes. And just I would like to add one word of caution for the slide on Page #8. This ERP margin that you see there does not include the effect of shipping cost versus shipping returns. So this is the pure product cost and the pure product revenue. And therefore, it is always slightly higher than the margin that we have in our financial reporting system. Just because in our ERP system, it's completely impossible to backtrack all of the shipping results into one individual product. So that's usually a little bit higher. And so please do not start to expect that we will be able to grow this to something like 60% or 64%. That's -- in 2020 will not be possible.
No. But I got you right. Did you say 50% gross margin full year 2020? 50-ish?
50-ish.
For 2020 full year?
Yes.
Okay. Got you. Okay. Cool. Regarding cash flow then on the full year basis, do you expect to be free cash flow positive then -- based on that information you have on hand?
Yes. That's something that we are very confident that throughout 2020, we will continue to be cash flow positive.
Yes. Okay. Cool. One question is sorry to ask, but we have to touch that just to have clear. Is the lawsuit in Thailand. I mean you made your provisions in FY '19 for that. Is that all settled? Is that all done. I mean it's not done because the lawsuit is ongoing, but done in regards to financial or potential financial impacts. Is that also all baked in, so to say, and provisions made in order to be prepared whatever the decision of the lawyer will be at the end of the day? Or to give us an update here, please?
This is essentially ongoing. There is -- in the year 2020, we expect to have first decisions on all of the actions that are ongoing there. At the moment, it is tricky to predict when these decisions are going to happen, because many courts have postponed a substantial amount of court hearings. Fortunately or unfortunately -- fortunately, for us, nothing has happened that would lead us to a situation that we would have to reevaluate the situation in a more negative way than we have done in full year 2018 and 2019. Up until now, we continue to live under the assumption that all of these legal actions are not going to be successful and that these losses will be lost.
Okay. One last question to Mr. Fischer. You earmarked the previous year's figures for Q1 '19 restated? What was the basis of the restatements you made?
Basically, only the effects from the foreign currency translation. You remember that in the past years, we always had some impact from these foreign currency translations, intra-group-wise, which led for the balance sheet in the equity, a significant impact on the capital, on the foreign currency translations results. And this has been corrected in backwards for 2019. It's basically the same which we had in the full year numbers for 2019. So the numbers for 2019 have been -- or 2018 have been restated. And that is something, which is now going through 2019, which is basically the impact from the discontinued operations. So if you remember 2019, Q1, which we published last year, we had some impact from the discontinued operations. All of this is now fixed or is going on and on with corrections for the discontinued operations. So this is also what you see gross margin-wise. So you might remember that in the past, we always had a deviation between the gross margin from the P&L and the gross margin from the segment reporting. This is now also gone, because comparing the numbers to 2018, this was totally necessary. But now 2019 and 2020 to compare, we can wait on that. And this has been fixed by restating the 2018 numbers, which is basically the foreign country -- sorry, foreign currency translation results in the equity.
[Operator Instructions] Mr. [ Philip Rai ] from [indiscernible].
Well, actually, Volker has raised quite a number of my questions. But I wanted a bit dig further into Q2 gross margin, and now you said 50-ish for the full year. If I look at basically the number of multi-source -- multi-factory sourcing, which we have in Q2 or Q2 to date, basically, it looks much better than in the fourth quarter, isn't it? And so actually, I would expect you to be able to even exceed the Q4 gross margin. Is there any mistake in my assumption or can you elaborate on that a bit?
No, your calculation is correct, of course. But we would like to be a little bit cautious, not to be too bullish on that point. You remember that our outlook just 4 weeks ago was less optimistic than today. The change was that as 4 weeks ago, we had 3 months, Jan, February and March, where we struggled, then April showed an improvement. They showed us we are on a good track. So all in all, we have a basis. We have a confidence. Nevertheless, it's, compared for 2020, 5 months out of 2, which we had a good development. So we need to carry this on. The corona crisis with its -- the outcome in total on the economy and also at the end, on our group, it's something that we need to look at throughout the year so there will be, of course, also some periods like in January, where we need to make some kind of sales to get rid of remaining products and where we see also some shorter periods of declining margins again. So to keep that level of margins of the 60%, 64%, ERP-wise. So without delivery costs, et cetera, for the for -- the total period for the remaining year of 2020 is something, which would be great, but we doubt that this is going to be the case. So this is why we think that a 50% margin for 2020 is something, which would be a success in total, not only compared to the past years, but also compared to the first quarter. And -- yes, and in the end, that the product supply from India and China, we expect also in the future to be difficult.
I think you mentioned -- I'm not sure if it was in the call or in a private conversation that you basically were able to compensate for the lost shipments out of India and China with some ad hoc purchases by major suppliers. And were these ad hoc purchases basically a onetime benefit for margins? Or was there anything noteworthy in the margin of these products?
Obviously, we could purchase this replacement at good prices, but I don't think that this has -- has seen a lot of onetime effects. So the way we operate our value chain at the moment, it's something that we think we will be able to continue to manage. So we do not see that kind of if we also return to our original supply chain that this will put pressure on our margins. On the contrary, I think our negotiation power towards all of the suppliers of rough gemstones, also of production capacity at the moment is slightly better than it was in the past, because all of the retail demand and jewelry is still pretty much gone. So there is a substantial amount of overcapacity in the market at the moment.
Not good for you. And probably a bit more strategic on the profitability of the webshop. Well, you gave some, I guess, that our gross margin numbers, which you have referred to in Q1, and on these metrics, you are already slightly more profitable, at least in Q1 than your overall group business. And I would assume that you -- as you've noticed big fixed cost drain of the TV broadcast that your web-only business, your webshop is significantly more profitable. Can you comment a bit on this profitability split?
Yes. Clearly, our web business is a lot more profitable than our television business. But I may add one remark of caution to this, a very substantial part of our web new customers are new customers that we generate based on our television signals. So the web business is more profitable, much more profitable. But at the same time, it gains quite a few amount of new customers from our television business. And that is unfortunately something that is really tricky to calculate. So you can guess basically any kind of number that the web business would have to pay for a new customer to the television business in order to make a proper controlling report. And based on that, you could either make the television business enormously profitable again, and the web business very unprofitable. So that's something that would be very tricky to gauge, which is why we don't do it in the first place.
Yes, understood. I think that's very fair to do it that way. But at least the incremental, well, stage of the webshop is highly profitable in the end?
Yes. Yes, clearly.
And then I think Wolfgang also touched on it on the savings potential in the second quarter. As I understand it, basically none of your measures had any significant impact on Q1 operating expenses. I think you started in the reduced hours in April. So that should lead easily to a double-digit cost decline in the second quarter. Is there any mistake in that assumption or...
Yes. Sure. Our cost base will decline in Q2. The direct savings straight from the reduction of our broadcasting time is in the region of a little bit more or a little bit less than EUR 0.5 million per quarter. And then we have other savings that were being -- managing at the moment, but that has not yet materialized. So if nothing changes, we assume that in the second quarter, we will at least save this EUR 0.5 million out of the reduction in broadcasting hours. Other cost optimizations are still being evaluated.
Sounds good. And probably lastly, on your short-term labor on your quarter, right, well, how many people are still -- or how -- what percentage, whatever is easier for you, are still in short-term labor? And how do you plan to manage this process of only -- with short-term labor?
We have currently roughly 30% of the workforce in quota-wise and short-term labor. And we assume that this will continue to be this way, as long as our supply chain will not be back fully operational. Because the majority of the effect of quote-wise comes from the fact that we have reduced our broadcasting hours, which clearly leads to significant reductions all across the value chain. So we don't need presenters, we don't need producers, we don't be technicians. We don't need planning for these hours. We don't need [indiscernible] but also, we don't need the warehouse during that time. So for example, in the warehouse, we are currently evaluating whether we can return from a 3-shift system to a 2-shift system, which saves us quite substantial amounts of money. Because, obviously, warehouse hour at night is more expensive than a warehouse hour throughout the day.
Well, it sounds good. I hope the good momentum continues and all the best for the future.
Okay. Thank you very much.
[indiscernible], may we have your question please?
I have a few questions, most of them around some numbers. Let's just begin with Italy. The loss that you saw in your segmental reporting, it's small, but is it going to disappear completely in the course of the year?
Yes. This is just some residual losses out of unexpected costs that we did not provision for in 2019. And we don't believe that this smaller loss will continue to be that way. Based on our current information, it will disappear. But clearly, we have provisioned for all of the costs in 2019. So if any additional cost happens there that we have not provisioned for, then this will return. But based on the current information, we don't see that.
Yes. There are some very, very few costs for running the company throughout the process of liquidation, but it's not significant.
Okay. And second question is on your guidance, you're guiding for the segment EBITDA, and you say you have had a loss of EUR 2.1 million in that last year. Now I'm not able -- I do not know, but I'm not able to reconcile these numbers. Because I have an EBITDA loss of EUR 4 million for the total group. So maybe it would be helpful if you could translate this guidance of segmental EBITDA into stated EBITDA for the year. What would be the guidance for that?
Yes. If you look at the financial results for the full year 2019. I think it was on Page 17 of the Annual Report 2019. There, you see basically the similar structure to what we had in the presentation on Slide 14, where you can see the operations, basically Germany, the operations for the closed branch in Rome or the local sales division in Italy as we named it. And all of this together is the continuing operations. And this has a total result of EUR 2.1 million. So this is without impact, which we -- external impact we had in 2019 from the closed areas in Thailand and the stock options program. So this is the amount we are referring to, EUR 2.1 million segment EBITDA. And in terms of gross margins and revenue, we refer to the continuing operations. So if you compare 2020 in terms of our guidance, we are going -- we basically say that the revenue of EUR 38 million, continuing operations. So without Italy, so the revenue in 2020 is going to be slightly higher than this.
And this was a good EUR 38 million?
Yes. EUR 38.5 million.
Okay. And how do I come from a segment EBITDA then to the stated EBITDA for the group, for this year?
Yes, clearly. What we did in 2019 throughout the year to have a comparison to 2018 is that we basically eliminated the impact from the closed factory. So going one year back in 2018, when we closed the factory in Thailand, accounting-wise, we had to adjust for the intercompany profit. What -- how to say, destroy the P&L view. Because all the intercompany profits, we needed technically to show as cost of goods sold. So we have a proper view on the development of the group in terms of performance. We adjusted for the extra costs of the factory. The closure of the factory was basically due to the fact that the cost per piece were increasing through the years instead of decreasing, as it was expected. And these impacts, we eliminated for 2018 as well as for 2019. And this is the major deviation between the results in 2019.
So what do I read out of this then? Is segment EBITDA in this current composition of the group, is it the same like stated EBITDA?
I'm sorry, stated?
Yes.
Almost. The biggest difference is stock-based compensation.
Okay. Okay. That's fair. Fine. And then another question on depreciation was EUR 0.24 million we've seen in the first quarter. Can I take this 4x for the full year?
Yes. So there will be no significant change.
Okay. And then you sold a lot of the sales volume in Q1 out of your inventories, obviously. Can you comment on how happy you have been with the valuations you have found there? Were they okay? Or...
Well, happy and unhappy. So happy in the sense that clearly, we sold all of the inventory with good margins or not with good margins, but with margins. So even in Q1, we continue to be confident that the valuation of our inventory is correct in the sense that it's worth more than we have it in our book's worth. Unhappy, clearly, because when we had all of the disruption in value chain, we had to go back to our inventory and sell part of our inventory as opposed to new products, and that was something that we would have preferred to avoid and to sell off our existing inventory more slowly at higher margins.
If I get this right, then since you do not produce yourself anymore, all of your inventory is finished goods, more or less?
Yes. Since 2018, all of the inventory that we show in our books is finished product. And with -- sorry, with a very small exception that some of our inventory is loose gemstones. But the loose gemstones inventory that we have in our inventory are loose gemstones sold -- ready for sale. So these are loose gemstones that we also sell as loose gemstones.
And now because I was a bit puzzled by your answer on that, but you are not happy to reduce your inventories, which is something that usually analysts like. And we like it if inventory compared to sales is not too high. But what you say is that you want to spare your inventory for occasions when for what reason ever, you can service for very high prices, did I get this right?
No, but the sell down, clearly, over the course of the next quarter and also in 2021, we will continuously reduce our inventory to a level that's long-term sustainable. So we will continue to reduce this inventory. That's clear. In Q1, 2020, this process was a lot faster than we would have hoped it to be. And clearly, whenever you push product into the market, this comes at the expense of margins. So we would have preferred to continue to do this process a little bit more moderately in order to sell the product at higher prices. But in Q1, we had no chance to do that because we needed to maintain our revenues.
Okay. That's understood, Bernd. And my last question is on your TV time that you've produced now. I understand you want to eventually go up to your usual time slots again, but the question would be whether maybe this is not necessary at all because maybe in less hours, you can sell not really in percentage-wise, less goods than because the demand concentrates more on these time slots. So your profitability out of these, at the end, could be higher? Are these thoughts wrong?
No, they are not wrong. They basically turn around the correct question of what do we do with our broadcasting time and what do we do with the 24 hours that they have. At the moment, we do not see that we are going to return to 18 hours of live broadcasting anytime soon, most likely, not in any time in 2020. The cost of our broadcasting basically comes from 2 factors. Factor number 1 is personnel costs. So paying the people, who produce, broadcasting and cost factor number 2 is distributing this signal to households. And clearly, when we reduce our broadcasting time from '18 hours to 12 hours, we save on all of the personnel costs and for producing this signal. So therefore, this is an immediate cost saving and the quota-wise rules in Germany have been enormously helpful in order to do this, in a time of urgent need as fast as possible. So that has really helped us. And the cost of distributing the signal will pretty much stay the same. So companies like SES Astra or Vodafone or Deutsche Telekom, who are distributing our signal will not send us a smaller invoice in a situation in which we have less live broadcasting hours. So going forward, we will have to very carefully evaluate on how to manage these 2 factors. So it's possible that we will be at the 12 hours for the foreseeable future, but it's also possible that we will return to 18 hours. So clearly, we will only return to 18 hours, if this is producing us higher profits. So we are not going to do this just for the fun of returning to 18 hours.
Mr. Volker Bosse from Baader Bank.
A follow-up question. I would come back on the static webshops, the EUR 2.6 million of sales. How much of sales is generated in Germany out of that? And how much sales is coming from schmuck.de? How much is from Juwelo? Can you split it, please?
I can give you the immediate answer on how much comes from juwelo.de and from schmuck.de. That's 100% from juwelo.de. Schmuck.de, at the moment is a website that we operate in order to generate traffic for Juwelo. It helps us to generate organic traffic based on the search word schmuck and help us to foster Juwelo, but it doesn't generate direct sales. And then for the split between Germany and the rest of Europe, maybe Florian, you can answer that.
Yes. So of course, the biggest part of the revenue comes from the German webshop. It's over 70% that comes from our German webshops. Then we have, as a second country, France, Italy, Netherlands and then some smaller shops.
France, Italy. Okay. Cool. And they all -- I mean, France, Italy brings to the point COVID-19, of course. I mean you said the shops grew, but did also Italy, France, I mean, countries, which were very much hit hard by the COVID also contributed to the growth. Is that right?
Yes. So interestingly, also in these countries, we see -- we didn't see these negative impacts of the general jewelry and watches sector, that had minus 50% in March. So also our international shops, we see growth and we see positive development.
Perfect. Congratulations. One follow-up, please, to -- it's regarding the operating income in Q1 '19, you had EUR 0.8 million operating income. It was a figure, which went tremendously up in the course of the restatement, I guess. So Mr. Fischer, could you give a bit of background, what is EUR 0.8 million of operating income last year, as it is a quite high number in regards to your overall figures?
Yes. So in the segment EBITDA, this extraordinary income is excluded, so that's why. And this is regarding the consolidation of the U.K. companies, which technically happened on the 1st of January 2019. So this is the asset liabilities writing off.
The operating income, there was a positive result out of that closure of U.K.
Yes.
We have no further questions coming in.
Okay. So thank you very much to all of you, and I'm looking forward to our Q2 earnings call for the half year numbers. Thank you very much.
We want to thank all the participants of this conference. Thank you very much and goodbye.