Zalando’s 2018: market share before profit
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Zalando’s 2018: market share before profit

Zalando’s fourth quarter operating earnings might have recovered, but the online fashion retailer says it’s putting profitability second this year. Instead, the German company will look to take a leaf out of Ecommerce giant – and potential competitor – Amazon’s book. Market share first, profit second. That was the message last week, when Zalando released positive earnings early (the full results, along with Zalando’s official forecast, will be available on March 1).

Zalando’s share price is up more than 7% already in 2018!

graph 0122 zalando

SOURCE: Yahoo Finance

For the fourth quarter of 2017, Zalando said that sales rose somewhere between 21.2% and 23.2% year on year to a figure in the ballpark of €1.32 to €1.35 billion. At the high end, this matches analysts’ expectations of €1.345 billion. Meanwhile, the company’s adjusted earnings before interest and taxation should come in “between €107 million and €120 million” – potentially beating expectations of €114 million. We’ll know just how dead on analysts were on 1 March, when the company provides us with finalized figures.

The fourth quarter marked a recovery for Zalando. After sales were hit by an “unseasonable warm” October, according to co-CEO Rubin Ritter. Black Friday and Christmas saw the company make up for this slow period, and a focus on marketing and pricing paid off when it came to stimulating sales.

Looking forward, the company says investment is the theme for 2018, as it looks to protect its business against marauding giants like Amazon and deepen engagement with customers. Ritter told the press that “our focus will remain on strong market share gains, facilitated through continued investments.”

Disclosure

Dominion holds Zalando in its Global Trends Luxury Fund.


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