Zalando SE Unsponsored ADR ((ZLNDY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Zalando SE’s recent earnings call painted a picture of a robust quarter, marked by substantial growth in both B2C and B2B segments. The strategic integration of ABOUT YOU has been a double-edged sword, contributing to growth but also presenting profitability challenges. Despite these hurdles, the company’s strategic advancements and positive outcomes were the dominant themes of the call.
Strong Financial Performance in Q3 2025
Zalando reported a commendable 6.7% year-on-year pro forma GMV growth and a 7.5% increase in pro forma revenue. The adjusted EBIT reached EUR 96 million, slightly exceeding the previous year’s figures, showcasing the company’s resilience and effective financial strategies.
Expansion into Lifestyle and Sports
The company announced a new partnership with the German Football Federation, extending until 2030. This move aims to position Zalando as a premier football destination. Additionally, partnerships with various European marathons are set to enhance its presence in the running category, further diversifying its lifestyle and sports offerings.
B2B Segment Double-Digit Growth
Zalando’s B2B segment experienced impressive double-digit growth, with a 15.6% increase in combined revenues. This growth was driven by ZEOS Fulfillment and SCAYLE, underscoring the company’s successful strategies in expanding its B2B operations.
Successful Integration of ABOUT YOU
The integration of ABOUT YOU has expanded Zalando’s active customer base to over 60 million. The company confirmed its full-year 2025 guidance, including the contributions from ABOUT YOU, indicating a successful merger and strategic alignment.
New CFO Appointment
Zalando announced the appointment of Anna Dimitrova as the new CFO, effective January 1, 2026. Dimitrova brings a wealth of experience from capital-intensive, technology-driven sectors, expected to bolster Zalando’s financial leadership.
Impact of ABOUT YOU on Profitability
The inclusion of ABOUT YOU has impacted profitability, lowering the adjusted EBIT margin by 0.7 percentage points to 3.2%. This highlights the financial challenges accompanying the integration of new business units.
Increased Fulfillment and Marketing Costs
Fulfillment costs rose by 0.6 percentage points to 24.3% of revenue, while marketing expenses increased to 9.3% of revenues. These increases are attributed to the consolidation of ABOUT YOU, reflecting the cost pressures of expanding operations.
Lower Group Gross Margin
The group gross margin decreased by 1.1 percentage points to 39.6%, influenced by commercial activations and the inclusion of ABOUT YOU’s lower-margin commerce business. This points to the ongoing challenge of maintaining high margins amidst expansion.
Decrease in Cash Reserves
Zalando’s cash and cash equivalents fell by EUR 1.3 billion, primarily due to the paydown of convertible bonds and the acquisition of ABOUT YOU. This significant decrease underscores the financial commitments involved in strategic acquisitions.
Forward-Looking Guidance
Zalando remains optimistic about its future, confirming its full-year 2025 guidance and aiming for accelerated growth and increased profitability. The company is focused on aligning with its midterm targets for 2028, leveraging its strategic partnerships and expanding customer base to drive future success.
In conclusion, Zalando SE’s earnings call highlighted a quarter of strong growth and strategic advancements, despite the financial challenges posed by the integration of ABOUT YOU. The company’s forward-looking strategies and partnerships position it well for continued success in the competitive retail landscape.