After the Zalando shares slipped at the beginning of the week due to profit warnings from Asos, the all-clear can now be given.

After a profit warning from the competitor Asos, the share of the German online mail order company Zalando slipped down at the beginning of the week, reaching a record low of 20.99 Euros, almost the same as in 2014 (17.01 Euros).

After the British online mail order company Asos lowered its sales and profit targets for the current fiscal year 2018/19 from 20-25% to 15% due to weak business, its shares also reached their lowest level for three years and fell by almost 40%.

Slide in share price recovers towards midweek

The stationary fashion trade has been suffering from online competition. Now online retailers are also coming under increasing pressure. In recent weeks, there have already been sales and profit warnings at Sports Direct International, Superdry and Tom Tailor. For Zalando, however, analysts are giving the all-clear.

The analysis company Independent Research has lowered the price target for the fashion retailer from 32 to 26 Euros following the profit warning from British competitor Asos. However, the rating was left at “hold”. Just two days later, the daily high for the share was 24.55 Euros, and Zalando almost made up for his weekly losses. Thus the price slide after the profit warning turns out to be exaggerated.

Nevertheless, it cannot be disregarded that the share price has fallen by almost half in only five months by more than 55% from its all-time high of EUR 50.34 for the year.

Zalando focuses on sales growth in the last quarter

In a press release issued by Zalando in November, the company expected sales growth of 20-25% in the fourth quarter after a weak third quarter and a downward revision of its business forecast. The online retailer blamed the unusually long and hot summer for the weak quarterly figures and the lower forecast. The autumn/winter season also started late as a result.

Zalando Co-CEO Rubin Ritter: “We are clearly not satisfied with our financial results in the third quarter. This does not alter our goal of doubling our business to EUR 10 billion gross merchandise volume by 2020 and building up the fashion ecosystem in Europe at full speed. In the fourth quarter, the team’s focus will be on bringing the year to a successful conclusion.”

According to its own figures, the company’s share of the European market was 1.3% in 2017 and is expected to increase to 5% in the long term. Zalando will present its full year and fourth quarter 2018 results on February 28, 2019.

 

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Image: iStock

//CF