Zalando stock jumps as online retailer sees stronger growth

Zalando SE rose more than 10% in early trading after Europe’s largest online fashion retailer stuck to its full-year guidance and appeared to be on top of handling the worst inflation in decades and the volatility of consumer demand.

The German retailer now expects improved profitability and a return to growth in the second half, according to a statement on Thursday.

The brighter outlook comes after Zalando negatively surprised the market in June, when it warned earnings would be well below its previous forecast and forecast a new profit range.

The new forecast called for adjusted profit of up to 260 million euros ($264.7 million), almost half of the previous peak expected. Zalando blamed macroeconomic challenges which are likely to be “longer lasting and more intense than expected.”

Zalando said performance began to improve in the second quarter as the number of active customers increased and its customer loyalty program grew. It has introduced minimum online shopping value in the 25 markets it operates in, which has improved “order economics”, reduced costs and improved efficiency in its European logistics market, the company said. .

Shares of Boohoo Group Plc and Asos Plc also rose in early trading on Thursday.

Zalando’s results are reassuring as the company was expected to cut its outlook again, RBC analyst Sherri Malek said in a note.

While online retailers exploded during the lockdown when people had no choice but to use the internet to shop, that growth has since slowed as normal shopping habits return. Consumer demand is also volatile as rising inflation in the Eurozone to a record high undermines consumer confidence.

Zalando sells a mix of own-brand and third-party clothing. The retailer has been expanding aggressively over the past few years. Last year, as online sales boomed, she hatched a plan to corner a 10th of Europe’s estimated 450 billion euro fashion market in the long term.

By Deirdre Hipwell

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Zalando posts the first decline in sales since its creation

First-quarter sales fell 1.5% to 2.2 billion euros ($2.33 billion), after recording a 46.8% increase in the same quarter last year thanks to the coronavirus pandemic.


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