3Q16 RESULTS

German-based online fashion retailer Zalando reported that it expects 3Q16 year-over-year revenue growth to fall in the range of 16-18% to €827-841 million. The company achieved strong revenue growth during the quarter, despite a sluggish European fashion market. Zalando meaningfully increased profitability in the quarter. For 3Q16, the company expects to achieve an adjusted EBIT in the range of €8-25 million, corresponding to an adjusted EBIT margin of 1.0-3.0%, up from negative EBIT of €24 million and an adjusted EBIT margin of (3.3)% in 3Q15.

9M16 RESULTS

Zalando expects to report strong 9M16 revenues in the range of €2,540-2,554 million, up around 22% year over year. Adjusted EBIT for 9M16 is expected to come in at £109-126 million, corresponding to an adjusted EBIT margin of 4.6% at the midpoint, and representing margin expansion of 290 basis points from 1.7% in 9M15.

GUIDANCE

Reflecting strong 9M16 results, Zalando reiterated its FY16 guidance to deliver revenue growth at the upper end of its 20.0-25.0% estimated range. Following clear profitability improvements, the company increased its FY16 guidance for adjusted EBIT margin to fall 5.0-6.0%, up from its previous estimated margin range of 4.0-5.5%. The company will report full and detailed 3Q16 results on November 10, 2016. FY16 revenue consensus estimates stand at £3,675 million, implying annual year-over-year growth of 24%. Consensus expects operating profit of £180 million, implying an adjusted FY16 EBIT margin of 4.9%.