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Zalando says happy with first-quarter despite margin pressure
April 19, 2017 / 6:25 AM / 7 months ago

Zalando says happy with first-quarter despite margin pressure

BERLIN (Reuters) - Zalando (ZALG.DE), Europe’s biggest pure online fashion retailer, said it was happy with its start to the year, even as discounting for the post-Christmas sales weighed on its margin.

A Adidas shoebox stands above a Zalando cardboard box on a staged scene in Berlin, Germany June 8, 2016. REUTERS/Axel Schmidt/File Photo

Zalando said on Wednesday that it expected its first quarter margin on adjusted earnings before interest and taxation (EBIT) to come in at 1 to 3 percent, compared with a Thomson Reuters Smart Estimate for 3 percent.

“The first quarter is always difficult when it comes to margins because of the winter sales,” co-Chief Executive Rubin Ritter told Reuters.

He said that overall the first quarter had gone very well, and that the group had had a good response to a new marketing campaign targeting male customers.

“The new season’s range has got off to a good start,” he added.

Shares in Zalando were indicated down 3 percent after the results, set to be the biggest decliners on the MDAX index of medium-sized German companies.

DZ Bank analyst Thomas Maul said in a note that the lower than expected EBIT was nothing for investors to worry about.

“We believe that the combination of fashion expertise, high operating efficiency and innovative technology gives Zalando a competitive advantage,” he wrote.

Founded in Berlin in 2008, Zalando has grown rapidly to become one of the German capital’s biggest employers, delivering 1,500 brands in 15 countries from huge out-of-town warehouses.

It said sales in the first three months of the year rose a preliminary 22 to 24 percent to 971 to 987 million euros (812 million pounds to 825.5 million pounds), in line with a Smart Estimate for 982 million euros.

That compares with a growth rate of 24 percent a year ago and a rate of 26 percent in the fourth quarter of 2016.

Zalando, which delivers 1,500 brands to 15 countries, has seen sales growth slow in its core Germany, Austria and Switzerland region, but is still expanding fast in newer markets like the Nordics.

The company, which reports final quarterly results on May 9, reiterated a forecast for 2017 sales growth of 20 to 25 percent in 2017 and an EBIT margin of 5 to 6 percent.

($1 = 0.9331 euros)

Reporting by Victoria Bryan and Rene Wagner; Editing by Maria Sheahan

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