The effect of COVID-19 on European Consumer Retail

Article

The effect of COVID-19 on European Consumer Retail

COVID-19 Valuation & Capital Markets Impact Monitor

An analysis of the effect of COVID-19 on share prices, analysts’ forecasts and valuation multiples of Pure Online and Omnichannel Retail companies.

Introduction

Following the COVID-19 outbreak, equity markets across the globe exhibited declining trends. Although the equity markets have shown (partial) recovery since March 2020, the uncertainties around - and effects of COVID-19 still have impact on company performance.

For our research we have analysed the effect of COVID-19 on share prices, analysts’ forecasts and valuation multiples of European Consumer Retail companies (pure B2C), split in Pure Online Retail and Omnichannel Retail across 6 industry sub-segments.

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Summary of results

As our research shows, European Consumer Retail companies have shown significant recovery since March 2020 and have outperformed the MSCI EUR index and the MSCI EUR Consumer indices. This recovery was primarily driven by the strong performance of Pure Online Retail which benefits from customers’ changing habits and the measures taken by European governments following COVID-19.

On average, analysts deflated their revenue and EBITDA forecasts of the European Consumer Retail companies. However, differences between industry segments as well as between Pure Online Retail and Omnichannel Retail are clearly visible. Lastly, we observe an increase in EV/EBITDA multiples for both Pure Online Retail as well as Omnichannel Retail.

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