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Zalando Gets Chance to Prove Itself Against Amazon

Europe’s largest e-tailer estimates earnings could reach a record €300 million this year due to a lockdown-induced surge in online shopping.
Source: Zalando
By
  • Bloomberg

BERLIN, Germany — For Zalando SE, Europe's largest online fashion seller, the pandemic has turned from a crisis to a chance to cement its position as Europe's best answer to Amazon.com Inc.

Zalando forecast earnings could reach a record €300 million ($341 million) this year late Wednesday. In March, the company abandoned its forecast of €275 million after Covid-19 turned global and most consumers froze non-essential shopping and stockpiled food.

Online demand has surged during lockdowns as brick-and-mortar stores closed, boosting the German company’s revenue. Social distancing and hygiene requirements are still making the return to stores less appealing. The shares rose as much as 5 percent, boosting Zalando’s market value to about €17 billion, more than that of French retailer Carrefour SA.

Zalando attracted 180 new manufacturers to its partner program in the quarter as more brands seek a proven channel for online distribution with wide reach and efficient logistics.

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“We are confident our business will do well,” Chief Financial Officer David Schroeder said on a call. “It is definitely a confident outlook.”

Pent-up demand from March as well as a lower rate of returned merchandise also contributed to a strong quarterly performance, Zalando said. The shares have risen 49 percent this year, making them one of the best gainers among German stocks and also leaving behind smaller rivals Boohoo Group Plc and Asos Plc.

It’s been a rollercoaster year for Zalando so far, however. In the first quarter, the company suffered a record operating loss after people refrained from shopping in March and Zalando wrote down €40 million worth of inventory. For the second quarter, the company expects profit of €200 million to €220 million, a record and twice what it earned a year ago.

The company said it added more than three million customers in the second quarter.

Zalando will present full second-quarter earnings on August 11.

By Richard Weiss.

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