What: Zalando, Europe’s leading online fashion platform, posted strong third-quarter 2024 results, with double-digit growth in both its B2C and B2B sectors, driven by increased demand and innovations in customer experience.

Why it is important: Despite challenges such as a low net profit margin and inventory management concerns, Zalando's growth surpasses the German market average, showing its resilience and potential undervaluation, which could appeal to investors.

Zalando has reported solid third-quarter results for 2024, with a 7.8% increase in gross merchandise volume (GMV) to EUR 3.5 billion and a 5% rise in revenue to EUR 2.4 billion. This growth is supported by strong consumer demand and strategic investments in customer experience, including personalised services and innovations like 3D virtual fitting rooms and a virtual personal assistant. While Zalando faces challenges such as a low net profit margin (currently at 1.5%) and inventory management issues, the company’s growth rate exceeds the German market average. With a forecasted annual revenue growth of 5.6% and profit growth of 24.4%, Zalando remains a key player in the online fashion market. Moreover, its stock price of EUR 28 suggests potential undervaluation compared to its estimated fair value of EUR 70.03, presenting an opportunity for investors. However, with CFO Dr. Sandra Dembeck stepping down, the company will need to address these challenges to maintain its momentum.

Zalando outperforms the German market with double-digit growth