German fashion e-tailer Zalando expects first-quarter results above market expectations as a result of a stronger-than-expected start to the spring-summer season as well as a lower-than-expected return rate.
According to preliminary figures for the first quarter of 2021, Zalando increased Gross Merchandise Volume (GMV) by 54.5-56.5% to EUR3.13-EUR3.17bn (US$3.76-$3.81bn). This compares to EUR2bn in the prior-year period.
Revenues are forecast to be up by 46-48% to EUR2.22-EUR2.26bn from EUR1.5bn last time, while Zalando expects an adjusted EBIT in the same period between EUR80-EUR100m. This compares to an adjusted loss before interest and tax of EUR98.6m a year ago when the firm was impacted by lower consumer following lockdown measures and an exceptional inventory write-down of EUR40m as a result of the revised sales expectations for the season.
The median of the analysts’ consensus surveyed by the company as of 29 March, was 50% for GMV growth, 45.5% for revenue growth, and EUR41m for adjusted EBIT.
CFO David Schröder says: “The successful execution of our platform strategy allowed us to serve even more customers and to create opportunities for even more partners amidst a challenging overall European fashion market environment.”
Aneesha Sherman, Bernstein analyst notes a few weeks after super-sizing its growth ambitions, Zalando announced a strong step in the right direction – a positive profit warning for Q1 2021.
“The combination of continued lockdowns through most of Europe and strong spring/summer fashion shopping in anticipation of reopening pushed up GMV ~55%, with revenue and profit coming in significantly above Consensus. The GMV outperformance continues to strengthen Zalando’s position in the winner-takes-all e-commerce platform world.
“The extended lockdowns across Europe, particularly in Germany, suggest that Zalando will have a strong Q2, and the company’s push to grow in Eastern Europe will further boost the FY, so we do not expect this unexpected growth to reverse through the year. We upgrade our FY2021 growth estimates to just above the top end of previous guidance: 33% GMV growth and 29% revenue growth. We upgrade our EBIT estimate from EUR415m to EUR430m, from 4.1% to 4.2% EBIT margin.
“This is a strong first step towards the super-sizing of the business over the next decade, as the rapid expansion of the 3P model strengthens Zalando’s position in European e-commerce.”
Zalando will publish its financial figures for the first quarter of 2021 on 6 May.