Zalando Sees Solid Growth After Strong End to 2018

BERLIN, Germany — Zalando, Europe's biggest online-only fashion retailer, said on Thursday it expected solid sales this year after posting better-than-estimated figures for the end of 2018 and gaining traction among 1.3 million new customers.

The online retailer said its fourth-quarter sales rebounded to soar 25 percent to €1.7 billion ($1.9 billion), while adjusted operating profit came in at €118 million ($135 million), both ahead of average analysts' forecasts.

Zalando shares had dived 44 percent in the last year after it cut its outlook twice, blaming slower sales growth on the unusually long, hot summer in Europe, with logistics costs rising as it faces rising competition from players such as Amazon.

In December, British rival Asos cut its sales growth forecast for the 2018-19 year to 15 percent from a previously cited 20-25 percent and its operating profit margin target to around 2 percent from 4 percent.

For 2019, Zalando is targeting growth in gross merchandise volume — the value of products sold on its site — of 20-25 percent, with revenue growth at the lower end of the range, and an adjusted operating profit of €175 million to €225 million.

Earlier this week, Morgan Stanley warned that the European online fashion market was more mature than previously thought, cutting its price targets for both Zalando and Asos.

"The days of profitable 20-25 percent top-line growth are long gone. With the maturation curve steeper than previously thought, we think market forecasts for both topline growth and operating leverage are too ambitious," it wrote.

By Emma Thomasson; editors: Riham Alkousaa and Sherry Jacob-Phillips.