Zalando sees strong quarter, but share price hit by lukewarm guidance
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Zalando sees strong quarter, but share price hit by lukewarm guidance

Online fashion retailer Zalando reported strong earnings for its second quarter last week, but saw its share price decline slightly on weaker than expected guidance. The company posted solid results across the board, with the exception of a slight decline in profitability – particularly of note was a double-digit increase in revenue and strong Key Performance Indicators (KPIs), which signify a formidable underlying business.

graph 1208 zalando

SOURCE: Yahoo Finance

The company said that it saw net income for the period of €51.8 million, while revenue shot up by 20.9% to €1.3 billion. Adjusted earnings before interest and tax (EBIT) came in at €94 million for the quarter, but Zalando guided towards the low end for full-year 2018, predicting adjusted EBIT in the range of €220 – €270 million.

The company, which sells 2,000 brands in 17 countries and employs 15,000 people, also saw great development of its KPIs: it had its highest ever number of orders in a single quarter (29 million), and saw active customers increase by 15.9% to 24.6 million. Those customers were also shopping more frequently: as much as four times a year, which represents an all-time high.

Zalando’s CEO, Rubin Ritter, was keen to stress the importance of these indicators, saying: "The strong development in customer KPIs shows that our engine is running extremely well. We're excited to see that our customer-centric focus is paying off, despite a continued challenging fashion market environment. Our Partner Program is growing particularly strongly, accounting for about 10% of merchandise volume sold in the second quarter."

Disclosure

Dominion holds Zalando in its Global Trends Luxury Fund.


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