Zalando shares can partially offset losses: Zalando collects annual forecasts – analysts cancel price targets

Weniger Investitionen: Zalando-Aktie kann Verluste zum Teil wieder aufholen: Zalando kassiert Jahresprognose - Analysten streichen Kursziele zusammen

The company, which is listed on the DAX, has therefore now lowered its annual targets and expects, at best, a slight increase in sales in 2022. In the first quarter, Berliners had already felt the return of trade stationary after the corona pandemic, deteriorating consumer sentiment and rising costs. The environment continued to deteriorate in the second quarter of the year and the mood to spend fell, according to a statement released early Thursday evening. The shares fell in the afternoon.

For gross merchandise volume (GMV), management now expects an increase of 3-7% to 14.8-15.3 billion euros in 2022. So far, growth of up to 23% was targeted. In this context, sales should increase by only 3% to 10.7 billion euros in the best case, announced Zalando. However, revenue could also stagnate at 10.4 billion euros, after the board had forecast growth of up to 19% in early May.

Earnings before interest and taxes (EBIT), adjusted for special effects, should now be between 180 and 260 million euros in 2022, after the 430 to 510 million euros previously targeted. And this despite the fact that the company now wants to significantly reduce investments compared to the original plan.

It is not the reduction in annual targets that is surprising, but its magnitude, writes analyst Sherri Malek of the Canadian bank RBC in a first reaction. Overall, the post-pandemic industry needs to strike a better balance between growth and profitability. Therefore, Zalando will probably have to lower its growth ambitions. Thanks to the leading roles in Europe and the platform strategy, the group still has the means to grow faster than the sector.

For analyst Georgina Johanan of the American bank JPMorgan, only the scale of the reduction target is surprising. She even sees the risk that Zalando will have to backtrack even more during the year. The company points out that the adjusted forecast assumes “an acceleration of growth and a significant improvement in profitability in the second half of 2022”.

This objective must be achieved by adapting the offer to changes in customer demand. The company also wants to save. The first measures to this effect were already implemented in the second quarter. These included reducing marketing investments, adjusting investments in logistics infrastructure to increase capacity utilization and introducing a minimum order value in 15 additional markets.

Nevertheless, according to Zalando, things got worse in the second quarter compared to analysts’ expectations. They expected GMW to grow 5%, sales increase 1.5% and operating profit to 104 million euros. “The second quarter is profitable, but weaker than expected,” Zalando said. Zalando will publish the results on August 4, 2022.

Zalando did not specify whether “profitable” refers to operating profit or net income. In the first quarter of the year, Zalando already had to face a deficit of a good 61 million euros. Customers either opted for products from the high-priced range or moved from the middle price segment to cheaper entry-level products. Added to this are disruptions in the supply chain and higher advertising costs in order to attract customers.

Zalando cuts the least – dealers: short sellers are likely to buy

Zalando shares, which have meanwhile been hit hard by a profit warning, recouped most of their losses on Friday afternoon. More recently, they were down 1.57% to 25.14 euros. At their lowest, they had previously fallen in double-digit percentages to EUR 20.94, which was below the issue price of EUR 21.50 when the items went public in the fall of 2014. Because consumers are spending less money due to inflation and recession fears, the fashion retailer also expects revenue to fall.

“An earnings warning and a weak second quarter were expected, but it’s even worse than feared,” one trader noted. However, he was already expecting some recovery in prices later in the morning. Indeed, short sellers who would have bet on falling prices could close these positions before the weekend and take profits after the fall of the last few months.

The Dax group (DAX 40) surprisingly and drastically lowered its annual targets on Thursday after the close of trading. Responsible for the poor outlook are, among other things, high inflation, fears of a recession and a gloomy mood among many consumers. Analysts then stroked their price targets for the stock one after another. However, most of them were still well above the current price level of a good 22 euros with their new price targets.

With its online sales, Zalando has long been seen as a beneficiary of the corona pandemic, which was also reflected in the stock market. Between the corona shock of March 2020 and the peak of July 2021, the value had almost quadrupled. Since the record of almost 106 euros, the price has fallen strictly. Since the start of the year alone, Zalando shares have lost more than two-thirds of their value.

Barclays lowers Zalando’s target to 30 euros – “Equal Weight”

British investment bank Barclays lowered Zalando’s price target from 48 to 30 euros, but left the rating at “equal weight”. The online fashion retailer’s profit warning was inevitable, analyst Emily Johnson wrote in research published Friday. It’s not surprising, but its magnitude is.

Deutsche Bank Research lowers Zalando target to 42 euros – “Buy”

Deutsche Bank Research lowered Zalando’s price target from 76 to 42 euros after a profit warning, but left the rating at “Buy”. This step was necessary, writes analyst Adam Cochrane in a study available Friday. Now the online fashion retailer’s goals are realistic and investors can adjust to them. The stock is cheap.

FRANKFURT (Dow Jones) / BERLIN (dpa-AFX) / FRANKFURT / LONDON (dpa-AFX Broker)

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