German fashion e-tailer Zalando anticipates a “significant” increase in second-quarter sales and EBIT amid an accelerated consumer shift from offline to online.
The Berlin-based firm expects both top and bottom-line figures to be “significantly” above current market expectations, pointing to changing consumer behaviour, in particular a strongly increasing preference for digital offerings. It also credited the continued execution of its platform strategy, including the accelerated expansion of the Zalando Partner Program.
The median of the analysts’ consensus surveyed by the company as of 25 May was 19% for gross merchandise volume (GMV) growth, 16% revenue growth, and EUR104m (US$117.06m) for adjusted EBIT.
Aneesha Sherman, analyst at AB Bernstein, notes: “Zalando has been ramping up its Partner Program (commission model) sales, moving away from its traditional wholesale platform model. The company is seeing increased interest in Partner Program this year on the back of the coronavirus.”
She adds Zalando is also seeing increased uptake of the additional service revenue streams of fulfilment (ZFS) and marketing (ZMS) that Partner Program brands have the option to add on, which are much higher-margin and form a big part of the bull case on the stock.
“As of last month, the company saw an increase in Partner Program to about 20% of GMV – and this strong PP performance has continued through the months of May and June. Equally, ZFS penetration had already ticked up in Q1 and seems to be doing the same in Q1. They have also seen ZMS as a percent of GMV increase this year, versus the 1% they last reported at Q4, making progress towards the 3-4% target penetration.”
Zalando said last month it foresees revenue growth of between 10-20% in 2020, despite the challenging trading environment due to the coronavirus.
Zalando will publish a trading statement on 16 July and its financial figures for the second quarter on 11 August.