Home24: Online retailer buys Butlers decoration shop

With the takeover, the Berlin-based e-commerce retailer, which has long been part of the Rocket Internet empire, wants to expand its range and stationary business. To date, Home24 has operated ten of its own showrooms. “The ranges from Butlers and Home24 complement each other perfectly. Together we can create a comprehensive range from large pieces of furniture to accessories on the set table, ”said Marc Appelhoff, CEO of Home24, explaining the purchase.

“The Butlers branches in attractive locations multiply our possibilities for direct customer contact.” Home24 showrooms are to be integrated in the first Butlers branches. For Appelhoff, 43, an important strategic step that “significantly improves the company’s competitive position despite a difficult market environment”.

More and more furniture is being sold online

Only every eighth piece of furniture in this country is sold on the Internet. However, the pandemic gave a powerful boost. The competition in the online furniture trade is growing steadily: In addition to Wayfair, Westwing and Otto.de, classic furniture retailers such as Ikea and even discounters are selling more and more furniture online. With the takeover, Home24 wants to become more independent from online marketing. Both brands should be retained and grow faster together – in e-commerce as well as in brick-and-mortar retail.

Gerrit Heinemann, Professor of Business Administration and Commerce at the Niederrhein University of Applied Sciences, does not see as many synergies from the takeover: “Home24, which is not so used to success, is obviously buying sales and a rounding-off range on favorable terms. The branches and franchise stores actually make no sense at all – especially not for the Home24 range – and in my opinion they are an accessory. ”If the stationary route were an option for Home24 at all, then in view of the corona crisis it would actually be an inopportune moment late, judges trade expert Heinemann.

Butlers has had eventful times: In 1999, business economist Josten opened a branch in Cologne with Frank Holzapfel, the first Ikea Germany boss. Josten’s family had been trading porcelain since 1829.

Butlers initially focused on the set table. The pioneer controls the collections from production to distribution. A vertical concept that had previously only existed in the industry at Ikea and Habitat. The chain grew steadily to over 100 branches.

Butlers survived bankruptcy in 2017

In 2017, however, Butlers went into plan bankruptcy. In Great Britain the people of Cologne had gotten over the top and lost a lot of money. In addition, the range was geared too much towards furniture. The number of branches in Germany was reduced to 74. Of almost 1000 employees, around 800 remained at that time.

Butlers has recovered from the bankruptcy and expanded the branch network again – although the competition with Zara Home and H&M Home, for example, has grown strongly. The Butlers designers develop over 3,000 new items every year, most of which are made in Asia. In addition, Butlers sells its articles across Europe at over 5000 sales points of other dealers.

Butlers founder Josten currently holds a quarter of Butlers – just like the NRW Bank. The 56-year-old now receives 3.9 percent of new shares from Home24. Josten will continue to “play a key role in shaping the business of Butlers” and, along with the management of Home24, will also be responsible for the group strategy. “Our respective strengths come to the fore even better with our merger,” says Josten.

Butlers home decoration and own brands will also be sold via Home24 in the future and vice versa. Online sales already account for a quarter of Butlers’ business. The Cologne-based company is aiming for sales of around 95 million euros in 2021. According to the Federal Gazette, this was still 80 million euros in 2019.

Despite lockdown in the pandemic, Butlers will be “significantly profitable” in 2020 and 2021, said Home24. According to the Federal Gazette, the annual surplus in 2019 was less than one million euros. In the lockdown, many of the total of 1,000 employees had to go on short-time work.

Deal boosts Home24 shares

With almost 2000 employees, Home24 has significantly more sales than Butlers. The online furniture retailer is active in seven European countries and also in Brazil under the Mobly brand. Together with Butlers, Home24 wants to turn over around 700 million euros this year.

The online furniture retailer, founded in 2009 as FP Commerce, benefited greatly from the lockdown and trend towards cocooning. In the record year 2020 with 492 million euros in sales, an annual operating profit was generated for the first time. The bottom line was a loss of 17.1 million euros.

In the first nine months of 2021, Home24 increased sales by 40 percent compared to the previous year. The adjusted pre-tax profit (Ebitda) was two million euros. However, the rapid growth weakened significantly in the third quarter. In addition, the costs have increased.

Like the entire industry, Home24 faces logistics problems. Wood has become scarce and expensive. The delivery times for furniture have been extended by the pandemic, so Home24 had to increase its inventory.

The deal with Butlers boosted Home24 shares by five percent when it went public on Friday. The online retailer has been listed on the Frankfurt Stock Exchange since 2018 and initially disappointed. The former main shareholder Rocket Internet sold more and more shares. The price fluctuates strongly and was recently quoted around ten euros. In December, Home24 got down from the SDax. Berenberg Bank recently lowered Home24’s price target from EUR 33 to EUR 22.50 due to supply chain problems, but continues to advise buyers.

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