Zalando shares are lower Tuesday, after the largest online fashion site reported weaker than expected third quarter results. The business also reduced its full year 2018 outlook for a second time. However, it said it is works to increase profitability of smaller orders.
By 1230 BST, Zalando shares were 8.03% lower at €31.63. The stock has been trending broadly higher in recent weeks.
Zalando Q3 results disappoint
Earlier Tuesday, Zalando reported its third-quarter results. They showed revenue growth of 11.7% form a year earlier, to €1.20 billion. The online fashion retailer also said its post-tax loss widened from a year earlier to €41.7 million, from €11.1 million in Q3 2017.
“We are clearly not happy with our financial results in the third quarter,” said Zalando co-CEO, Rubin Ritter.
“Our eyes are set on building the ecosystem for European fashion at full speed and our 2020 target of doubling the business to €10 billion in gross merchandise volume. For the fourth quarter, the team’s full focus is now on pulling off a strong finish to the year,” Ritter added.
There were positive details in the update, too however:
- At 25.1 million, Zalando achieved a record high number of active customers during Q3, equivalent to around 6% of the European population.
- Orders also grew 22.8% to 27.7 million.
Acknowledging the disappointing Q3 results, Zalando also cut its full year 2018 outlook for a second time this year.
The online fashion store said it expects revenue growth of the lower end of its 20-25% target and adjusted EBIT of €150-190 million. It also expects to spend some €300 million in 2018, below if previous plan to invest €350 million.
As well as devising a new approach to improve the profitability of the smaller average orders it now receives, Zalando said it is also working to improve the returns process and make it a less costly process.