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Zalando Surges as Spring Clothing Demand Spurs Upbeat Forecast

Zalando SE surged to a record in Frankfurt after Europe’s largest online fashion retailer said it expects first-quarter sales to rise faster than expected on strong demand for spring clothing.
By
  • Bloomberg

FRANKFURT, Germany — Zalando SE surged to a record in Frankfurt after Europe's largest online fashion retailer said it expects first-quarter sales to rise faster than expected on strong demand for spring clothing.

The shares rose as much as 14 percent after the Berlin- based company forecast sales of 635 million euros ($677 million) to 648 million euros, representing growth of 27 percent to 29 percent from the prior year. That topped the 622 million euros expected by analysts surveyed by Bloomberg. Zalando also predicted a second straight quarter of earnings, after turning profitable for the first time last year.

“The main driver appears to have been gross margin, a persistent theme over the past nine months,” brokerage Exane BNP Paribas said in a note to clients. “This recovery from the discounting of 2013 looks to have continued.”

The online fashion purveyor backed by German Internet impresario Oliver Samwer is recovering from a lackluster initial public offering in October. Last month, the company said it plans to sell a 7.3 percent stake, with key shareholders and some management members cutting their holdings.

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Zalando shares were up 13 percent at 27.58 euros as of 10:14 a.m. in Frankfurt. Investors paid 21.50 euros in the IPO.

Earnings before interest and taxes and adjusted for stock- based compensation will be 25 million euros to 39 million euros in the first quarter, compared with a 23 million-euro loss a year earlier, Zalando said. Fewer markdowns helped, and sales were especially robust in March, it said.

The company plans to release its final first-quarter results May 12.

By: Aaron Ricadela; editors: Matthew Boyle, Paul Jarvis and Thomas Mulier.

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