WEST3 Westwing

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, with an initial focus on retail sales of furniture, household items and assembly services. From 2012, the company went through a period of rapid GMV expansion until 2016, driven by the growth of e-commerce in home and décor products. In 2018, after a reduction in investments by the foreign controlling shareholder and its decision to concentrate resources on the European market, the Brazilian operation went through a management buyout sponsored by the private equity fund Axxon Group, becoming independent from the other international operations of the Westwing group.

The company’s corporate structure was reorganized from 2018 onwards, culminating in its transformation into a corporation in September 2020 and the reverse merger of its 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 a category “A” issuer registration with the CVM. The funds raised were directed mainly to accelerating the core business, expanding the addressable market and increasing the offering of private label products, with emphasis on investments in marketing, technology and logistics. From 2022, in a context of post-pandemic demand contraction and a slowdown in e-commerce growth, the company began focusing its efforts on gains in operating efficiency and profitability improvement, adjusting its base of physical stores and cost structure.

Westwing’s business model combines online and physical retail, with a central role as a shopping platform for home, décor and lifestyle products. The company has built a positioning based on curation, organizing its offering in a “shoppable magazine” format, in which short-duration 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 need-based purchases and direct product search. In addition to e-commerce, the company operates Westwing Stores, brick-and-mortar stores located in the city of São Paulo, which serve as a complementary sales and brand relationship channel.

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

From a supply chain and logistics perspective, Westwing operates a distribution center in Jundiaí (SP), with around 28 thousand square meters, from which orders are processed under cross docking and own stock models. The business is predominantly structured with a lean 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 dispatch; drop shipping, in which billing and shipping are carried out directly by suppliers, with the possibility of collection and routing by Westwing itself; own stock, in which the company anticipates purchases and keeps items in inventory to shorten delivery times or offer exclusive products, including imported items; and the supply of 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, where products are styled in décor settings. On the supply side, the company maintains relationships with more than 4,600 registered suppliers, with a portfolio of around 1.97 million SKUs, which includes third-party products and exclusive private label collections. The private label line, developed by the in-house design team and manufactured by partners, has increased its relevance within GMV and delivers higher margins than third-party products, becoming an important pillar of the differentiation and profitability strategy.

Westwing’s activities are concentrated in the Brazilian market, with no international operations or revenue from abroad. The company sells predominantly to end consumers in Brazil via its website and mobile apps, complemented by physical stores. The target audience is diverse 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 with participation also from consumers in classes C and D. Positioning in the home and décor segment places the company in a market characterized by high fragmentation, barriers to entry for foreign competitors due to import costs and logistical challenges, and structural growth in e-commerce and m-commerce in Brazil, driven by the increase in the number of internet users and the widespread adoption of smartphones.

From a regulatory standpoint, Westwing is subject to Brazilian legislation applicable to e-commerce, consumer relations and, in particular, personal data protection rules. The enactment of the General Personal Data Protection Law (LGPD) established parameters for the 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 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 to the market and governance standards associated with the Novo Mercado. Regarding environmental, social and governance (ESG) aspects, the company states that, to date, it does not publish a specific report or greenhouse gas emissions inventory, but indicates it is in the initial stage of gathering data and benchmarking best practices to subsequently define a strategy aligned with its long-term pillars.

From an economic and financial perspective, Westwing presents indicators typical of a digital retail business in an adjustment phase after a period of strong expansion. In 2024, the company recorded GMV of approximately R$ 250.9 million and net operating revenue of R$ 167.7 million, with a gross margin of around 40% and negative net results, although with smaller losses than in previous years. The recent trajectory reflects a period of GMV and revenue contraction after the demand pull-forward observed 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 aimed at nationwide coverage.