Zalando plummets in Frankfurt as a disappointing quarter and a guidance cut take their toll
The online fashion retailer reported a fall in net profit to 73.8 million in the first six months of the year and has revised its targets for 2026 downwards
(Il Sole 24 Ore Radiocor) - Disappointing second-quarter results and the downward revision of guidance have caused Zalando’s share price to fall sharply on the Frankfurt Stock Exchange. Specifically, in the second quarter Zalando reported a net profit down to 73.8 million from 96.6 million the previous year, a gross merchandise volume (GMV) of 4.92 billion euros (+20.7%) and revenue of €3.42 billion (+20.8%), whilst analysts had forecast €4.94 billion and €3.50 billion for these last two indicators respectively. Adjusted EBIT rose by 10% to 204.8 million, with a contribution of over 10 million from the integration of About You, but expectations had been for 215 million and the margin fell to 6% from 6.5% the previous year. Net working capital deteriorated further, falling to -494.0 million from -107.9 million.
In addition to this, ‘in line with market expectations’, Zalando now forecasts for 2026 that GMV and turnover growth will be at the lower end of the previous range of between 12% and 17% and has narrowed its adjusted EBIT target to a range of between €680 million and €720 million, compared with the previous estimate of between €660 million and €740 million.
“This is a downgrade that fell short of expectations from Zalando, and we expect the share price to fall further,” said analysts at JPMorgan in a research note, maintaining their ‘neutral’ recommendation with a target price unchanged at 32 euros. According to Deutsche Bank, the company has reported weak underlying trends for GMV and revenue in its business-to-consumer segment and fears a slowdown in consumer spending prospects.
Whilst acknowledging that the results are slightly below expectations, Deutsche Bank continues to regard the share as a buying opportunity and the target price remains unchanged at 35 euros. Jefferies views the results as mixed, given the market’s high expectations. The experts emphasise that it is particularly ‘critical’ that the online retailer’s growth in gross merchandise value fell short of forecasts.
