Zalando shares rise as company raises 2024 EBIT outlook, citing strong demand By Investing.com

Investing.com — Shares of Zalando (OTC:) (ETR:) rose on Friday after raising its 2024 financial outlook on stronger-than-expected demand.

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

The Berlin-based fashion and lifestyle e-commerce platform now expects full-year adjusted earnings before interest and taxes to come in between 440 million and 480 million euros, up from a previously forecast range of 380 million to 450 million of euros.

“The midpoint of the new EBIT guidance, which we find very conservative, is 3% ahead of the latest sell consensus,” analysts at RBC Capital Markets said in a note.

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

The company also raised its gross merchandise volume and revenue growth projections. Zalando now expects GMV to grow between 3% and 5% in 2024, up from its previous guidance of 0% to 5%.

Similarly, revenue growth is expected to be 2% to 5%, up from the previous forecast of flat growth at 5%.

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

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

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

The company’s number of active customers also continued to grow, surpassing 50 million, strengthening its customer loyalty efforts. In response to these positive trends, Zalando plans to focus additional investments 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 spending plans for 2024.

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