• Active Customers: Increased by 0.5 million quarter on quarter, now above 50 million.

• GMV Growth: 4.4% for the first nine months; 7.8% year over year in Q3, reaching EUR3.5 billion.

• Revenue: Up 5% in Q3, translating into EUR2.4 billion.

• Adjusted EBIT: EUR93 million in Q3, a significant increase of EUR70 million year over year.

• Adjusted EBITDA Margin: Improved by 2.9 percentage points to 3.9% in Q3.

• B2C Segment Revenue Growth: 7.8% GMV and 4.3% revenue growth in Q3.

• B2B Segment Revenue Growth: 11.1% in Q3, significantly ahead of group revenue growth.

• Gross Margin: Improved by 4 percentage points year over year to 40.7% in Q3.

• Cash and Cash Equivalents: Approximately EUR2.4 billion, almost EUR500 million higher than last year.

• Full-Year GMV Growth Guidance: Expected between 3% to 5%.

• Full-Year Revenue Growth Guidance: Expected between 2% to 5%.

• Adjusted EBIT Full-Year Outlook: Upgraded to EUR440 million to EUR480 million.

• CapEx Investments for 2024: Lowered to around EUR200 million.

• Warning! GuruFocus has detected 8 Warning Signs with ZLDSF.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zalando SE (ZLDSF) reported a strong start to the autumn-winter season, leading to a significant increase in consumer demand compared to the previous year.

• The company increased its active customer base by half a million quarter-on-quarter, surpassing 50 million active customers.

• Zalando SE (ZLDSF) achieved a 7.8% year-over-year growth in GMV, reaching EUR 3.5 billion, and a 5% increase in revenues, totaling EUR 2.4 billion.

• The B2C segment showed strong performance with a significant improvement in gross margin, driven by better sell-through rates and lower fulfillment costs.

• The company upgraded its full-year outlook, reflecting stronger-than-expected performance in the third quarter, and is on track to meet its revised targets.

Negative Points

• Inventory levels increased significantly quarter-on-quarter, raising concerns about potential overstocking ahead of peak trading periods like Black Friday and Christmas.

• The B2B segment, while showing double-digit revenue growth, experienced lower profitability due to frontloaded investments in future growth.

• Marketing costs increased by 2.1 percentage points, reflecting higher investments in performance marketing, which could impact short-term profitability.

• The launch of the new loyalty program involves one-off costs and revenue deferrals, which may affect short-term financial results.

• The Frankfurt distribution center's opening has been delayed to 2026, potentially impacting logistics efficiency and capacity expansion plans.