FRANKFURT, Germany — Zalando SE forecast first-quarter operating profit will miss analysts’ expectations amid intensifying competition between European retailers and Amazon.com Inc. for a bigger share of Europe’s e-commerce market.
Shares of the German online fashion retailer fell as much as 5.8 percent Wednesday after its forecast for €10 million to €30 million in adjusted operating profit fell short of the consensus analyst estimate of €32.7 million.
Online incursions by retailers such as Inditex SA’s Zara and Hennes & Mauritz AB are increasing competition in the 46 billion-euro ($49 billion) European e-commerce market, where the biggest players are still dwarfed by Amazon. Zalando has a 1 percent share of the market and said last month that profit margins may shrink this year as it spends on countering slowing customer growth. Zalando will struggle to maintain sales growth above 20 percent in coming years, according to Bryan, Garnier & Co. analysts Antoine Parison and Cedric Rossi.
“We believe that online retailers are definitely caught between a rock (what does Zalando do that cannot be replicated by Amazon?) and a hard place (traditional retailers),” the analysts wrote in a note to clients.
Shares of rival Asos Plc earlier this month posted their biggest drop in five months on concerns the retailer’s growth may increasingly come at higher costs.
“We have said that revenue growth and aggressively gaining market share and getting more customers in Europe remain our priorities,” co-Chief Executive Officer Rubin Ritter said in an interview. “Profit is clearly positive and will be at about last year’s level. We are satisfied with our margin. Customers always expect discounts at the start of the year, but we did not discount goods unduly.”
Zalando declined traded 5.1 percent lower as of 11:14 a.m. in Frankfurt. The company will report full first-quarter figures on May 9.
By Richard Weiss, with assistance from Heather Burke; editors: Eric Pfanner, Thomas Mulier.