May 7, 2020 / 9:25 AM / a month ago

Zalando shares hit record high after upbeat outlook

BERLIN (Reuters) - Shares in German online fashion retailer Zalando (ZALG.DE) jumped 11% on Thursday after it said it expects full-year sales growth of 10-20% and a return to profitability following an initial hit from coronavirus lockdowns.

FILE PHOTO: The logo of fashion retailer Zalando pictured at its new headquarters in Berlin, Germany, April 10, 2019. REUTERS/Hannibal Hanschke/File Photo

Europe’s biggest online only fashion retailer said late on Wednesday demand started to recover in April, allowing it to predict that sales and gross merchandise volume (GMV) - sales made by itself or its partners - will grow 10-20% in 2020.

Zalando predicted that its adjusted operating profit will come in at up to 200 million euros ($215.98 million), down from 225 million in 2019.

It is the first online fashion retailer to give guidance for 2020. British rival ASOS (ASOS.L) said on April 7 its sales had plummeted 20-25% in the previous three weeks.

Zalando shares were up 10.7% at 0851 GMT, making them the second-biggest gainer on the German mid-cap index.

“The clear and positive guidance given makes this an overwhelmingly positive set of results,” said Bernstein analyst Aneesha Sherman, adding she was also encouraged by the number of new partners and customers Zalando signed up in April.

Zalando said it has signed up 50 new brands including Vaude and American Eagle Outfitters to its partner programme, a higher margin business than its core wholesale operation where it acts as a marketplace charging commissions.

The company also said it added 39% more new customers in April, accelerating from 17% growth in the first quarter.

Zalando reported first-quarter sales rose 10.6% to 1.5 billion euros and it reported an adjusted operating loss of 98.6 million euros, within the range it predicted when it reported preliminary results last month.

Before the coronavirus pandemic struck in Europe, Zalando had forecast sales growth of 15-20% for 2020, down from 20.3% in 2019, and GMV growth of 20-25%.

Reporting by Emma Thomasson; Editing by Michelle Martin

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