Surprising profit: Zalando is more optimistic for 2024

Business

Zalando headquarters Credits: Zalando

After a good start to the autumn and winter season of 2024, the online retailer Zalando wants to step it up a gear. In day-to-day business, the group is aiming for more profit than previously communicated. Managers are also no longer expecting the worst for other key financial indicators. Co-CEO Robert Gentz sees the company as well positioned to continue to grow.

As the DAX group surprisingly announced shortly after the stock market closed in Berlin on Thursday, earnings before interest and taxes (EBIT) for the current year, adjusted for special items, are now expected to rise to between 440 and 480 million euros. Previously, the figure was between 380 and 450 million euros. Zalando had reported an adjusted operating profit of just under 350 million euros for 2023.

The gross merchandise volume (GMV) for the current year is expected to increase by 3 to 5 percent to 15.1 to 15.4 billion euros. Sales are expected to increase by 2 to 5 percent to 10.3 to 10.7 billion euros in 2024. So far, managers had forecast a maximum of 5 percent for both figures and stagnation under unfavorable conditions. In 2023, the gross merchandise value was a good 14.6 billion euros and sales a good 10.1 billion euros.

Zalando wants to invest less

In total, the board now wants to invest around 200 million euros in 2024 - previously the range was 250 to 350 million euros. Zalando is likely to continue to push ahead with the expansion of its European logistics network. Here, the group is also building on the success of its own logistics system Zeos: The service provider is to take over sales and logistics for fashion companies, among other things.

Gentz also wants to increase customer loyalty and offer them "inspiring" shopping experiences. Zalando has been relying more on visual content and artificial intelligence for some time now, for example to display products on different backgrounds. Such content showed a higher interaction rate than conventional product photos. Video content ensured that customers were more likely to order. In addition, fewer customers would return orders. This helps because returns are costly for companies.

Demand increased in the third quarter

"Customer demand increased across the industry in the third quarter," Gentz continued. Based on preliminary figures, gross merchandise volume in the third quarter jumped by almost eight percent to 3.5 billion euros. In the three months to the end of September, Zalando generated sales of 2.4 billion euros, around five percent more than in the previous year. Analysts had roughly expected this for both figures.

In day-to-day business, earnings before interest and taxes and excluding one-off effects (EBIT) rose from 23 to 93 million euros - that was significantly more than analysts had expected on average. The management board plans to present the complete figures on November 5.

Only in the morning, competitor About You had raised its outlook. The Hamburg-based company is now also expecting a higher operating profit (via Ebitda) for its 2024/2025 financial year than before. It also reported a "dynamic" start to the cold season. "The cool autumn weather ensured double-digit growth rates, compared to the last financial year, when the mild September delayed the sale of the collections," it said. (DPA)

This article originally appeared on FashionUnited.DE. It was translated to English using an AI tool called Genesis and edited by Rachel Douglass..

Executive Management

Zalando