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Business in Zalando is booming thanks to the crown pandemic. As more and more customers order online, the internet retailer was able to increase sales and profits in the third quarter. At the same time, with the partial block, Zalando’s importance as a partner for fixed retailers who sell their goods through its platform increases. This is where the MDax Group is positioned. “We will continue to invest to drive our strong growth beyond 2020,” CFO David Schrder said at the presentation of final quarterly figures in Berlin on Wednesday.
The Internet retailer is considered a winner of the crisis. Because restrictions on public life, such as the temporary closure of shops and restaurants, as well as restrictions on contacts, play into the group’s cards. The trend is increasingly towards online shopping. After an initially weak start to the year with red numbers, business on the Zalando Internet platform has grown more and more, which is why management confidence for 2020 has also grown. At the beginning of October, Zalando raised its annual targets, which they are now well above their original spring plans.
Zalando is also more relaxed about the sharp increase in the number of infections and the new restrictions. “The second wave of the corona pandemic begins much more violently than expected, but we are much better prepared than the start of the pandemic,” Schrder stressed according to the announcement.
Zalando is developing into a trading platform, even more driven by the pandemic. In addition to their profession, the group offers brand producers space for their business, which was increasingly important to them in the days of Corona. According to Zalando, the “Connected Retail Program” has developed into the largest platform for local fashion stores in Europe with around 2000 affiliated partners.
The group wants to triple the number of connected businesses by 2021. Zalando expands abroad. From 1 November, the program has been extended to countries such as Norway, Denmark and Finland. Five more markets will follow in Austria, Switzerland, France, Italy and Belgium in 2021. Zalando benefits from the program through commissions paid by affiliated retailers, but due to the pandemic, the Berlin-based company has announced that it will waive commissions from connected retail until the end of the first quarter of 2021.
In the third quarter, the growing trend in online shopping brought the Zalando platform a good quarter more clicks and orders than a year ago. The number of active customers grew by about a fifth to 35.6 million. On average, each customer ordered a little more frequently and overall more expensive goods. As a result, between July and September, sales increased by almost 22% to 1.85 billion euros compared to the previous year.
As the spring and summer collections sold exceptionally well, Zalando was also able, as already known, to release write-downs of 35 million euros that the group had made in the spring due to the pandemic. The increase in efficiency also had a positive effect.
Adjusted profit before interest and taxes (EBIT) reached 118.2 million, a multiple of the previous year’s value of 6.3 million euros. The conclusion is that Zalando generated a profit of 58.5 million euros, after a loss of 13.6 million euros a year earlier.
Zalando shares the record of numbers
Shares hit a record high Wednesday following the internet fashion retailer’s quarterly report. The main drivers were the encouraging statements from management on the development of the partner programs and their multi-million dollar expansion. In the late morning the fee cost 88.58 euros, more than ever. In the meantime it came back a bit and closed 3.96 percent stronger at € 88.22. This means that its price has almost doubled over the year to date – the card is one of the best in MDax.
In the final third-quarter data, analyst Sherri Malek of RBC and Jrg Frey of Warburg Research saw no more surprises after the group had already released preliminary data in early October. At that time, management also increased its annual forecasts. As expected, the new goals were confirmed, both experts pointed out.
The quarter was “exceptional,” Frey further wrote, which has now been confirmed. “But even if the goals are still strong, the numbers now presented may have been something of a highlight,” the analyst added. Frey therefore does not expect any further increases in earnings estimates from the market and has confirmed his investment rating “Hold”.
RBC expert Malek, however, remains more optimistic and is confident that the fashion retailer will gain further market share, especially with the help of its fixed retailer platform, its partner program. Mainly because brand makers have increased their digital engagement, he wrote. As a result, Zalando’s margin is expected to more than double over time. The analyst believes that the stock’s valuation “is not yet exhausted”.
This morning, Zalando proved once again that business is thriving, most recently due to the corona pandemic. More and more are being ordered online, so sales and profits increased significantly in the third quarter. At the same time, with blocks and partial blocks, Zalando’s importance as a partner for stationary retailers who sell their goods through the Zalando platform grows. The MDax Group therefore wants to further position itself and invest one million double-digit figures in the expansion of its partner programs.
Analyst Georgina Johanan of the US bank JPMorgan also highlighted the aspect of the expansion of the partner program in particular. According to already known details, the numbers weren’t spectacular, but the partner program continues to provide strong impetus, he wrote.
(Dow Jones / dpa-AFX)
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