Zalando shares rise as company lifts 2024 EBIT outlook, citing strong demand

Investing.com -- Shares of Zalando (OTC:ZLNDY ) (ETR:ZALG ) rose on Friday after raising its financial outlook for 2024, driven by stronger-than-expected demand. 

At 3:29 am (0729 GMT), Zalando was trading 1.9% up at €30.41.

The Berlin-based fashion and lifestyle e-commerce platform now expects full-year adjusted earnings before interest and taxes to reach between €440 and €480 million, a jump from its previous forecast range of €380 to €450 million. 

“The midpoint of new EBIT guidance, which looks very conservative to us, is c.3% ahead of the most recent sellside consensus,” said analysts from RBC Capital Markets in a note. 

This improvement follows a strong performance in the third quarter, with adjusted EBIT soaring from €23 million a year ago to €93 million, indicating a solid rebound for the company.

The company also raised its projections for gross merchandise volume and revenue growth. Zalando now anticipates GMV to rise between 3% and 5% in 2024, an increase from the prior 0% to 5% guidance. 

Revenue growth is similarly expected to come in at 2% to 5%, up from the earlier forecast of flat to 5% growth. 

“We believe ZAL's growth will accelerate from here, as the company continues to spend on marketing and enhance its competitive advantage on services,” the analysts said. 

This revision comes after a 7.8% year-on-year increase in third-quarter GMV, reaching €3.5 billion, alongside a 5% rise in revenue to €2.4 billion.

Zalando’s upgraded forecast is a reflection of strong consumer demand during the third quarter, fueled by a successful start to the fall/winter season. 

The company’s number of active customers also continued to climb, surpassing 50 million, reinforcing its efforts to build customer loyalty. In response to these positive trends, Zalando plans to concentrate further investment in strategic areas such as European logistics and improving the customer shopping experience.

However, while the company remains committed to growth, it has adjusted its capital expenditure plans for 2024. 

It now expects to invest around €200 million, a reduction from the previously projected range of €250 million to €350 million.

Source: Investing.com