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Zalando expects strong results as fashion goes online

06/17/2020 | 02:45pm

German online fashion retailer Zalando said on Wednesday it expected a bigger increase in sales and operating profit in the second quarter than analysts are forecasting as the coronavirus pandemic prompts more people to shop online.

Europe's biggest online only fashion retailer said it had seen a strong increase in the preference for digital shopping and had also been helped by its strategy of shifting to become a marketplace for brands rather than just selling its own stock.

Bernstein analyst Aneesha Sherman said that was good news because providing logistics and marketing services for brands earns a higher profit margin than Zalando's core wholesale business.

"There is plenty of room to go in the transition, and this acceleration in the short-term further cements our long-term bull case," she wrote, adding that consensus expectations for the quarter had already been quite positive.

Zalando said the median forecast of the analysts surveyed by the company as of May 25 was for revenue growth of 16% and adjusted earnings before interest and taxation (EBIT) of 104 million euros (93.08 million pounds).

British rival Boohoo said on Wednesday it would top market expectations for profits and sales again this year after first-quarter results showed revenue up 45% as it adapted quickly to the coronavirus lockdowns.

Zalando's shares fell on Tuesday after Swedish investment firm Kinnevik sold part of its stake in the company, but they recovered some ground on Wednesday.

Zalando is due to publish a trading statement on July 16 and its final figures for the quarter on Aug. 11.

(Reporting by Emma Thomasson; Editing by Jon Boyle and Elaine Hardcastle)

Thomson Reuters 2020
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