Forecast confirmed: Zalando shares deep red: Zalando with after-tax loss in quarter

The Berlin online marketplace for fashion and cosmetics confirmed the targets for the full year.

Sales in the third quarter rose 23 percent to 2.283 billion euros. GMV, i.e. the total value of goods sold through online marketplaces including fee income, increased 25 percent to 3.083 billion.

Adjusted operating income before interest and taxes (EBIT) fell dramatically to 9.8 million euros from 118.2 million, and EBIT margin deteriorated from 6.4 percent to 0.4 percent, according to the report.

After taxes, there was a loss of 8.4 million euros, compared to 58.5 million euros earned by Zalando SE last year.

In terms of its targets for the full year, Zalando continues to land in the upper half of the range of EUR 400 to 475 million in adjusted EBIT, while GMV is expected to grow 31 to 36 percent to EUR 14.0 to 14.6 billion. . Sales are expected to increase by 26 to 31 percent to EUR 10.1 to 10.5 billion.

Strong recovery of Zalando shares is history again

Cautious statements by Zalando about future business growth beyond 2021 sent part of the online fashion retailer back on Wednesday hit hard by the coronavirus crisis. The paper broke its recovery that began three weeks ago and fell 7.6 percent to EUR 76.88 in the afternoon.

At the same time, it sank again below the recently won 21-day line at €79.15, indicating a short-term trend for chart-oriented investors. On 13 October, Zalando’s share fell to a thirteen-month low and then recovered a total of 14 percent by Tuesday. Now much of that recovery is history again.

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Warburg analyst Junior Frey said the decline in earnings in the third quarter comes as no surprise. However, he sees some room for improvement in the stock in the coming months, as then Zalando will have to be measured against last year’s high growth. In addition, Frey already sees the stock as “very valuable.” This could be an explanation for the fact that investors are now again using the recent interim surge as an opportunity to take advantage of it.

An analyst also cited statements made by management on the upcoming 2022 fiscal year during the conference call. They were “a little negative overall,” he said. Zalando expects an initial increase in recommended retail prices for the spring and summer seasons in the high single-digit to low double-digit range, “which could have a negative impact on demand”. This may already be influenced by the fact that consumers will have to dig deep into their pockets for energy and staple foods.

Furthermore, shifting investments to better customer relationships may not yield tangible results until after the 2022 fiscal year, while Zalando’s profitability will be hit even earlier.

Overall, though, he and other experts saw a lot of positive things, for example with respect to the comments made by management in the fourth quarter or with respect to platform strategy and the focus on network retail. Deutsche Bank expert Nizala Nijer described the confirmation of its annual annual targets for 2021 as a great reassurance in view of recent concerns about online fashion retail in general.

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Frankfurt (Dow Jones / DPA-AFX)