WEST3

Westwing Comércio Varejista S.A., traded on B3 under the ticker WEST3 and listed on the Novo Mercado segment, is a Brazilian retail company founded in December 2011. The company began its operations as a subsidiary of a German group of the same name, controlled by VRB GmbH & Co. B-157 and Brillant 1256 GmbH, initially focused on retail sales of furniture, household items and assembly services. From 2012 onward, the company went through a period of rapid GMV expansion until 2016, driven by the growth of e-commerce for home and décor products. In 2018, after a reduction in investments by the foreign controlling shareholder and its decision to concentrate resources in the European market, the Brazilian operation went through a management buyout sponsored by private equity fund Axxon Group, becoming independent from the other international operations of the Westwing group.

The company’s corporate structure was reorganized starting in 2018, culminating in its transformation into a corporation in September 2020 and the reverse merger of its controlling holding company Kedar Empreendimentos e Participações S.A. Subsequently, in February 2021, Westwing carried out its initial public offering (IPO) on B3, raising more than R$ 400 million in a primary offering and obtaining category “A” issuer registration with the CVM. The proceeds were directed mainly to accelerating the core business, expanding the addressable market and broadening the offering of private label products, with an emphasis on investments in marketing, technology and logistics. From 2022 onward, in a context of post-pandemic demand contraction and cooling e-commerce growth, the company started focusing its efforts on gains in operating efficiency and improved profitability, adjusting its base of physical stores and cost structure.

Westwing’s business model combines online and physical retail, with a core role as a shopping platform for home, décor and lifestyle products. The company built its positioning around curation, organizing its offering in a “shoppable magazine” format, in which short-term campaigns and a selected assortment are presented with a strong editorial and visual component. This model seeks to reproduce in the digital environment the discovery logic typical of window shopping in stores and shopping malls, differing from e-commerce platforms focused mainly on needs-based purchases and direct product search. In addition to e-commerce, the company operates Westwing Stores, physical stores located in the city of São Paulo, which serve as a complementary sales channel and brand relationship touchpoint.

Westwing’s operations are concentrated in retail sales of furniture, décor items and home accessories, but the company has also expanded its portfolio into adjacent lifestyle categories, including fashion, cosmetics, personal care, food and beverages, children’s products, pet items and bed, table and bath linens. The company’s net operating revenue comes from a single operating segment, predominantly tied to online retail, complemented by a business intermediation model in which the company, within the same curation concept, negotiates with suppliers products suited to specific campaigns. In this modality, Westwing decides the assortment offered, receives payment from the end customer, passes the amounts on to the supplier according to agreed terms and earns intermediation commissions.

From a supply chain and logistics standpoint, Westwing operates a distribution center in Jundiaí (SP), with approximately 28 thousand square meters, from which orders are processed under cross docking and own stock models. The business is predominantly structured under a low-inventory model, with purchases from suppliers made after sales to consumers are completed, especially via cross docking. The company uses four main supply chain arrangements: cross docking, in which products pass through the distribution center only for consolidation and shipment; drop shipping, in which invoicing and dispatch are handled directly by suppliers, with the possibility of collection and routing by Westwing itself; own stock, in which the company purchases in advance and keeps items in inventory to shorten delivery times or offer exclusive products, including imported goods; and supplying physical stores and kiosks. Last-mile logistics combines third-party carriers with the proprietary Westlog network, which includes a dedicated fleet, an urban hub in São Paulo and an operation integrated with the distribution center.

The customer and supplier base is a central element of Westwing’s business ecosystem. The company reports more than ten million registered users on its platforms and social networks, and 198.1 thousand active customers at the end of 2024, defined as those who made at least one purchase in the last twelve months. Engagement is stimulated by short-term campaigns, daily newsletters and proprietary editorial content produced in a studio located in São Paulo, which showcases products in décor settings. In terms of supply, the company maintains relationships with more than 4,600 registered suppliers, with a portfolio of around 1.97 million SKUs, including third-party products and exclusive private label collections. The private label line, developed by the in-house design team and produced by partners, has increased its relevance within GMV and offers higher margins than third-party products, becoming an important pillar of the differentiation and profitability strategy.

Westwing’s operations are concentrated in the Brazilian market, with no international operations and no revenue from abroad. The company sells predominantly to end consumers in Brazil via website and mobile apps, complemented by physical stores. The customer base is diversified in terms of income, with a focus on classes A and B, which account for a significant share of spending on furniture and décor in the country, but also including consumers from classes C and D. Positioning in the home and décor segment places the company in a market characterized by high fragmentation, entry barriers for foreign competitors due to import costs and logistics challenges, and structural growth of e-commerce and m-commerce in Brazil, driven by the increase in the number of internet users and the popularization of smartphones.

From a regulatory standpoint, Westwing is subject to Brazilian laws applicable to e-commerce, consumer relations and, importantly, personal data protection rules. The entry into force of the General Data Protection Law (LGPD) established parameters for collection, processing, storage and use of customer data, with oversight by the National Data Protection Authority (ANPD) and the possibility of administrative, civil and consumer-related sanctions in case of non-compliance. As a share issuer registered with the CVM and listed on B3, the company also follows the disclosure requirements for information to the market and the governance standards associated with the Novo Mercado. Regarding environmental, social and governance (ESG) aspects, the company reports that, so far, it does not publish a specific report or greenhouse gas emissions inventory, but indicates that it is in the early stages of gathering data and references of best practices to later define a strategy aligned with its long-term pillars.

From an economic-financial perspective, Westwing shows indicators typical of a digital retail business in an adjustment phase after a strong expansion cycle. In 2024, the company reported GMV of approximately R$ 250.9 million and net operating revenue of R$ 167.7 million, with a gross margin around 40% and negative net results, although with a reduction in losses compared with previous years. The recent trajectory reflects a period of GMV and revenue contraction after the demand pull-forward seen during the COVID-19 pandemic, leading the company to prioritize efficiency, logistics optimization and cost management. WEST3 shares, traded on B3, represent an interest in this discretionary retail model focused on home, décor and lifestyle, with a strong digital component, curated assortment and integrated logistics operation geared toward nationwide coverage.