Investing.com -- Zalando SE (ETR:ZALG) reported upbeat second-quarter results, driving its shares higher.
At 4:34 am (0834 GMT), Zalando was trading 2% higher at €22.42.
The European fashion platform saw a 2.8% year-over-year increase in Gross Merchandise Volume (GMV) growth came in at +2.8% year-over-year (yoy), which was in line with the company's compiled consensus.
This represents an improvement from the +1.3% growth in Q1. RBC (TSX:RY) Capital Markets had forecasted a +2.7% growth, making the actual result slightly ahead of expectations.
Q2 revenue increased by +3.4% yoy, surpassing both RBC Capital Markets’ forecast and the consensus estimate of +2%. Breaking it down by segment:
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B2C: Revenue grew by +3% yoy, outperforming the forecast of +1%.
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B2B: Revenue saw a +10% yoy increase, although this was below the anticipated +21%.
Zalando reported an adjusted EBIT of €172 million, exceeding consensus expectations of €166 million and RBC's forecast of €161 million. This result reflects a margin of 6.5%, which was bolstered by an improved gross margin of approximately +100 basis points yoy.
“We remain confident that the company can deliver adj. EBIT within the upper end of the guided range, forecasting adj. EBIT of €432mn,” analysts at RBC Capital said in a note.
The improvement in gross margin was driven by stronger sell-through of retail inventory. RBC Capital Markets expects this positive trend to continue into Q3.
Over the past 12 months, the number of active customers slightly declined by -1% year-on-year to 50 million. The average number of orders per active customer fell by -3% to 4.9. However, the average basket size increased by +4.6% year-on-year, reflecting a positive shift in consumer purchasing behavior.
Zalando's marketing cost ratio was higher than forecasted, but the fulfilment cost ratio was lower, contributing to the positive overall performance.
The company has reiterated its full-year 2024 guidance, expecting GMV growth to range between 0-5%. This is consistent with the consensus expectation of +3.2% and RBC’s forecast of +2.8%.
The company anticipates adjusted EBIT to fall within the €380-450 million range, aligning with the consensus estimate of €418 million and RBC's projection of €432 million. Capital expenditure (Capex) guidance remains at €250-350 million.
RBC Capital Markets maintains an Outperform rating with a price target of EUR 40.
This target is derived from a discounted cash flow (DCF) analysis, applying a weighted average cost of capital (WACC) of 9.5% and a terminal growth rate of 2.5%.