Zalando SE Q3 2024 Financial Results

In the third quarter of 2024, Zalando SE (ETR:ZALG) reported robust financial results, showcasing significant growth in gross merchandise volume (GMV) and revenue, alongside an improved adjusted EBIT margin. The company noted a notable increase in active customers and launched a new fulfillment center in Paris, reflecting its commitment to enhancing logistics and customer experience. Zalando's healthy cash position and upgraded full-year guidance further exemplify its positive performance and strategic initiatives.

Key Takeaways

• GMV for Q3 grew 7.8% year-over-year to EUR 3.5 billion, with revenues up 5% to EUR 2.4 billion.
• Adjusted EBIT for Q3 reached EUR 93 million, achieving a margin of 3.9%.
• Active customers grew by 0.5 million, surpassing 50 million.
• B2C segment revenue increased by 4.3%, and B2B segment revenue grew by 11.1%.
• Full-year guidance was upgraded to reflect 3%-5% GMV growth and 2%-5% revenue growth, with an expected adjusted EBIT of EUR 440 million.
• New fulfillment center launched near Paris to enhance logistics; further expansions planned.
• Strong cash position of approximately EUR 2.4 billion.

Company Outlook

• Zalando aims for a CAGR of 5% to 10% through 2028.
• Expected adjusted EBIT margin of 6% to 8% by 2028.
• The ecosystem strategy is anticipated to support ongoing growth into 2025.

Challenges and Opportunities

• Bearish Highlights: Negative net working capital reported due to better inventory management; 2024 capital expenditures revised down to approximately EUR 200 million.
• Bullish Highlights: Inventory decreased by 2.3% year-over-year. The expansion of ZEOS platform and integration with ASOS targets increased market share. Enhanced customer engagement through the Plus loyalty program and Zalando Fashion Assistant.

Delays and Performance Insights

• Delay in Frankfurt distribution center launch pushed to 2026, helping manage costs.
• Increased marketing spend to about 9% of revenue; normalization expected in 2025.
• Engaging customer initiatives are gaining traction with 1 million users for Zalando Fashion Assistant.
• ZMS (Zalando Marketing Solutions) targets 3%-4% of B2C GMV by 2028, growing at double-digit rates.

Zalando SE's strong performance in the third quarter underscores its effective navigation of the market landscape, focusing on strategic logistics and customer experience enhancements to fortify its position in the European market. With a solid cash reserve and an optimistic outlook, Zalando is well-prepared for future growth and challenges.