Post-Course Leap: What Comes Next?
Zalando, the popular European online fashion retailer, has seen a surge in its stock price, reaching its highest level since late July. This upward movement can be attributed to a large-scale purchase of Zalando shares by Danish entrepreneur Anders Holch Povlsen.
Povlsen, the founder of the fashion retailer Bestseller and a long-standing member of Zalando's supervisory board, purchased shares worth over 9.7 million euros last Friday. With this acquisition, Povlsen, who holds over 10% of Zalando and is the largest individual shareholder, has shown a strong vote of confidence in the company's future.
The surge pushed Zalando's price to its highest level since late July. However, the stock has already returned to a downtrend on Friday, with Zalando's stock breaking above the 50-day moving average but failing to sustain the upward momentum.
The revised forecast for Zalando is based on strong performance in the first half of the year, expected synergies, and progress in cost efficiency in the second half. The company is responding to the challenges posed by weaker demand in parts of Europe, high costs due to inflation, and intense competition in online retail with cost-cutting measures, a stronger focus on profitable segments, and expanding its partner program.
Despite these positive signs, not all analysts are optimistic about Zalando's prospects. Deutsche Bank analyst Adam Cochrane expects only short-term price gains from Zalando, citing falling gross margins due to higher discounts and a cautious revenue forecast as reasons for his expectations. JPMorgan analyst Georgina Johanan, on the other hand, sees signs of a better-performing online business from Zalando, but criticizes the recent weak profitability of the company.
In a recent development, Zalando raised its annual revenue forecast for 2022, including the takeover of About You in its 2025 expectations. The revised annual revenue forecast ranges from 12.1 to 12.4 billion euros, while the revised adjusted EBIT forecast ranges between 550 and 600 million euros.
Zalando's stock surged by around five percent on Thursday, topping the DAX. However, the company faces a challenging road ahead as it navigates the complexities of the online retail market. With the support of major shareholders like Povlsen and the implementation of cost-cutting measures and strategic initiatives, Zalando is well-positioned to meet these challenges head-on.
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