Zalando shares slide as the online fashion retailer cuts its 2018 outlook, again

Zalando shares are lower Tuesday, as the online European fashion site reported disappointing third-quarter results.

Zalando shares slide as the online fashion retailer cuts its 2018 outlook, again

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.

Forecast cut

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.

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