Zalando Battles Slightly Lower Than Expected Growth

Business of Fashion / Bloomberg Gadfly about Zalando’s recent numbers:

The German online fashion retailer said in November that full-year sales growth would be towards the higher end of its 20-25 percent range. On Tuesday, as it reported results for the final three months of its financial year, it said the outcome is likely to be more around the middle, at about 23 percent.

That might seem like nit-picking: it’s still the sort of growth rate that most store-based retailers would kill for.

But smaller rivals Asos Plc and Plc both recently upgraded their expectations for full-year sales growth, and both are projecting ranges that would put them ahead of Zalando. In comparison, its update looks distinctly disappointing.

It’s certainly not what the company expected which should be worrying in itself.

Cyber growth comes with a cost. Zalando said Tuesday that it would open a warehouse in Sweden in 2017. It has already opened a similar facility in France. At least it’s not avoiding these necessary expenses, but it doesn’t have much choice — Asos said last week that it would be stepping up investment.

Even after today’s fall, Zalando’s shares are up an impressive 27 percent over the past year. But Asos is up 85 percent, while Boohoo has skyrocketed by almost 300 percent.

Here’s the report from Zalando:

Zalando SE, Europe’s leading online platform for fashion, grew revenues in the first quarter of 2017 by 22.0-24.0% to EUR 971-987 million (Q1 2016: EUR 796.1 million), according to preliminary figures. Zalando expects to achieve an adjusted EBIT of EUR 10-30 million, corresponding to an adjusted EBIT margin of 1.0-3.0% (Q1 2016: EUR 20.2 million or 2.5%) for the same period. Zalando confirms its full-year guidance of revenue growth in a range of 20-25% and an adjusted EBIT margin in the range of 5.0-6.0%. […]

All figures reported herein are preliminary, full financial disclosure for the first quarter 2017 will be published on May 9, 2017.

We are at Zalando’s Vizions conference tomorrow. See some of you there.

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