October 31, 2019 / 7:24 AM / 19 days ago

Zalando posts third-quarter jump but flags slower fourth-quarter, hitting shares

BERLIN (Reuters) - Online fashion retailer Zalando (ZALG.DE) cautioned on Thursday that sales growth could be slower in the fourth quarter than last year due to the later timing of the “cyber week” discount period after it reported strong third-quarter figures.

The logo of fashion retailer Zalando is pictured at the new headquarters in Berlin, Germany, April 10, 2019. REUTERS/Hannibal Hanschke

Black Friday falls on Nov. 29 this year compared to Nov. 23 last year, shortening the peak selling period that usually happens between the ensuing “cyber week” sales and Christmas, finance chief David Schroeder told analysts.

“That is one reason why we won’t see the same level of relative growth in Q4,” Schroeder said, adding that the first month of the fourth quarter had gone “well but not exceptionally well”, although there was no cause for concern.

Zalando shares extended earlier losses after Schroeder’s comments to trade down 8% by 1032 GMT, making them the biggest faller on the German mid-cap index .MDAX.

Third-quarter sales surged 26.7% to 1.521 billion euros ($1.70 billion), ahead of average analysts’ expectations, while adjusted earnings before interest and tax (EBIT) came in at 6.3 million euros, swinging from a loss of 38.9 million a year ago.

However, Zalando confirmed its full-year target for revenue growth around the lower end of 20%-25% and an adjusted EBIT in the “upper half” of a range of between 175 million euros and 225 million euros.

Zalando, Europe’s biggest online-only fashion retailer, has seen its profitability squeezed by heavy investment in faster delivery as Amazon (AMZN.O) ramps up its fashion offering.

However, it has predicted a longer-term recovery in margins as it becomes more of a platform for brands rather than buying and selling stock itself.

Third-quarter revenue was boosted by more brands using Zalando’s logistics and advertising services, which are seen as key to the group’s medium-term targets to boost profitability.

Schroeder said Zalando was making progress in slowing a decline in average order size by introducing minimum order values to qualify for free delivery in more markets.

He dismissed concerns that new sustainability targets announced on Wednesday - including a pledge to pay to offset greenhouse gas emissions - could impact profitability: “We don’t expect a material impact on the bottom line.”

Sales rose nearly 23% in Germany, Austria and Switzerland region and 30.8% in its other European markets.

Zalando said customers of its new “Plus” loyalty scheme in Germany were already accounting for 10% of gross merchandise value - sales made on its website by itself or its partners - after only two quarters.

Reporting by Emma Thomasson; editing by Jason Neely

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below