Zalando Jumps as Online Fashion Retailer Sees Return to Growth

German online fashion retailer Zalando on Wednesday forecast a return to growth this year and said it was opening up its logistics business to more players, raising hopes of a boost to its performance and helping to lift its shares.

The stock jumped as much as 18.5 percent after the company also said late Tuesday it would buy back up to €100 million ($109 million) of shares, starting from March 13.

Zalando said on Wednesday it expected gross merchandise value (GMV) growth, a key metric measuring the value of all goods sold, of between 0 and 5 percent this year, after a 1.1 percent decline to €14.6 billion in 2023.

It said it was targeting a compound annual growth rate of 5-10 percent for GMV and revenue through 2028, as it updated strategies for both its fashion/lifestyle business and its infrastructure business (B2B) ahead of a Capital Markets Day on Wednesday.

In B2B, Zalando is opening up its logistics network, software and services to help the e-commerce transactions of brands and retailers regardless whether they take place on its platform.

By doing so, “Zalando seems to be reckoning that the historical growth story relying on even-increasing online fashion penetration is now close to the glass ceiling,” said Bryan, Garnier & Co analyst Clement Genelot.

“In other words, the growth potential has been reduced. Hence the shift towards a logistician business to address the over-capacity issue in its existing fulfilment network.”

Zalando also expects revenue growth of 0 to 5 percent this year, after a 1.9 percent drop to €10.1 billion in 2023.

“The wider range reflects the continued uncertainty we see in the market,” finance chief Sandra Dembeck told reporters.

Zalando, a multi-brand platform that sells clothes, shoes, and accessories, is facing weakening demand after a growth boom during the pandemic, as consumers grappling with inflation and high interest rates cut spending and turn to cheaper options offered by fast fashion rivals like China-based Shein.

Its shares were up 15 percent to €22 at 0823 GMT.

The company expects adjusted earnings before interest and tax of €380 million to €450 million this year, up from €350 million in 2023.

By Linda Pasquini and Chiara Holzhaeuser; Editors: Michael Perry and Mark Potter

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