Zalando SE Unsponsored ADR ((ZLNDY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Zalando SE’s Q1 2025 earnings call revealed a generally positive sentiment, highlighting strong growth in both GMV and revenue, alongside improved profitability and strategic initiatives such as the loyalty program and acquisition plans. While challenges like increased inventory levels and marketing costs were acknowledged, the overall outlook remains optimistic, with positives outweighing the negatives.
Accelerated GMV and Revenue Growth
Zalando reported a year-on-year GMV growth of 6.5% and revenue growth of 7.9% in Q1 2025. This growth was primarily driven by successful end-of-season sales and a robust start to the spring/summer season, underscoring the company’s effective sales strategies.
Improved Profitability
The company achieved an adjusted EBIT of EUR47 million for Q1 2025, representing a margin of 1.9%, which is an increase of 0.7 percentage points from the previous year. This improvement is largely attributed to a stronger gross margin in the B2C segment, reflecting enhanced operational efficiency.
B2B Segment Revenue Growth
Zalando’s B2B segment saw a significant revenue increase of 11.6%, outpacing the overall group revenue growth. This was driven by initiatives like ZEOS Fulfillment and strategic partnerships, including one with TikTok Shop, highlighting the company’s expanding influence in the B2B market.
Successful Loyalty Program Rollout
The upgraded Zalando Plus loyalty program was successfully rolled out to 13 markets, with over 15% of the customer base participating. This expansion demonstrates promising progress in customer engagement and retention strategies.
Strategic Acquisition of About You
Zalando’s acquisition of About You is progressing well, with 91.5% of shares secured and regulatory approvals advancing. The acquisition is expected to close by summer, marking a significant strategic expansion for the company.
Increased Inventory Levels
The company reported higher inventory levels, driven by preparations for the spring/summer season and a low baseline from the previous year. While this presents potential risks if demand does not meet expectations, it also positions Zalando to capitalize on anticipated market needs.
Cash Decrease
Zalando experienced a decrease in cash and cash equivalents by EUR600 million from Q4 2024, primarily due to lower operating cash flow and restricted cash related to the About You tender offer. This reflects the financial impact of strategic investments and acquisitions.
Increased Marketing Costs
Marketing costs rose by 0.5 percentage points, driven by investments in performance marketing and several brand marketing campaigns. This increase underscores Zalando’s commitment to enhancing brand visibility and customer acquisition.
Forward-Looking Guidance
During the earnings call, Zalando confirmed its full-year guidance for 2025, emphasizing a focus on growth acceleration and profitability. Despite geopolitical and macroeconomic challenges, the company remains committed to achieving its strategic goals, with continued expansion in both B2C and B2B segments.
In summary, Zalando SE’s Q1 2025 earnings call painted a picture of robust growth and strategic advancement, with strong performance in GMV and revenue, improved profitability, and successful initiatives like the loyalty program and acquisition plans. While challenges such as increased inventory and marketing costs were noted, the overall sentiment remains positive, with a clear focus on future growth and profitability.