German online fashion retailer Zalando on Wednesday forecast a return to growth this year and said it was opening up its logistics business to more players, raising hopes of a boost to its performance and helping to lift its shares.
The stock jumped as much as 18.5% after the company also said late Tuesday it would buy back up to 100 million euros ($109 million) of shares, starting from March 13.
Zalando said on Wednesday it expected gross merchandise value (GMV) growth, a key metric measuring the value of all goods sold, of between 0% and 5% this year, after a 1.1% decline to 14.6 billion euros in 2023.
It said it was targeting a compound annual growth rate of 5-10% for GMV and revenue through 2028, as it updated strategies for both its fashion/lifestyle business and its infrastructure business (B2B) ahead of a Capital Markets Day on Wednesday.
In B2B, Zalando is opening up its logistics network, software and services to help the e-commerce transactions of brands and retailers regardless whether they take place on its platform.
By doing so, “Zalando seems to be reckoning that the historical growth story relying on even-increasing online fashion penetration is now close to the glass ceiling,” said Bryan, Garnier & Co analyst Clement Genelot.
“In other words, the growth potential has been reduced. Hence the shift towards a logistician business to address the over-capacity issue in its existing fulfilment network.”
Zalando also expects revenue growth of 0% to 5% this year, after a 1.9% drop to 10.1 billion euros in 2023.
“The wider range reflects the continued uncertainty we see in the market,” finance chief Sandra Dembeck told reporters.
Zalando, a multi-brand platform that sells clothes, shoes, and accessories, is facing weakening demand after a growth boom during the pandemic, as consumers grappling with inflation and high interest rates cut spending and turn to cheaper options offered by fast fashion rivals like China-based Shein.
Its shares were up 15% to 22 euros at 0823 GMT.
The company expects adjusted earnings before interest and tax of 380 million to 450 million euros this year, up from 350 million in 2023.
