Zalando Shares Surge After Company Raises 2024 EBIT Outlook Due to Strong Demand

Shares of Zalando experienced a rise on Friday following an upgrade to its financial outlook for 2024, spurred by stronger-than-expected demand.

At 3:29 am (GMT), Zalando’s shares were up 1.9% at €30.41.

The Berlin-based fashion and lifestyle e-commerce platform has adjusted its full-year earnings before interest and taxes (EBIT) estimate to be between €440 and €480 million, an improvement from the previous range of €380 to €450 million.

Analysts at RBC Capital Markets noted, “The midpoint of the new EBIT guidance appears very conservative, approximately 3% ahead of the latest sellside consensus.”

This positive adjustment follows a robust third-quarter performance, where adjusted EBIT surged from €23 million a year prior to €93 million, demonstrating a healthy recovery for the company.

Zalando has also revised its expectations for gross merchandise volume (GMV) and revenue growth. The company now predicts GMV growth of 3% to 5% in 2024, increasing from the earlier forecast of 0% to 5%. Similarly, revenue growth is expected to be between 2% and 5%, compared to the prior projection of flat to 5%.

The analysts expressed optimism, stating, “We believe Zalando’s growth will accelerate from here as the company continues investing in marketing and enhancing its competitive edge in services.”

This upgrade follows a year-on-year GMV increase of 7.8% in the third quarter, reaching €3.5 billion, along with a 5% revenue rise to €2.4 billion.

The improved forecast reflects strong consumer demand throughout the third quarter, bolstered by a successful start to the fall/winter season. Zalando’s active customer base has also grown, surpassing 50 million, further solidifying its commitment to customer loyalty. In light of these encouraging developments, Zalando aims to focus more investment on strategic areas such as European logistics and enhancing the overall customer shopping experience.

Nonetheless, although the company is dedicated to strategic growth, it has revised its capital expenditure plans for 2024. Zalando now anticipates spending about €200 million, down from the earlier expectation of between €250 million and €350 million.