ZALANDO SE Zalando Q4/23 Earnings Call
March 13, 2024
Dr. Sandra Dembeck (CFO)
Zalando Q4/23
Executive summary
01 | In 2023 we delivered on our revised topline guidance and achieved the top end |
of our adjusted EBIT range -in what was a challenging year for online fashion | |
retail | |
Significant y-o-y improvement in adj. EBIT of EUR 165m to EUR 350m with an adj. EBIT | |
margin of 3.5% while GMV growth was at (1.1)% and revenue growth at (1.9)% | |
02 | In the forth quarter and throughout peak trading, amidst continued weak |
demand, we focused on increasing profitability and improved gross margin | |
Cautious wholesale buy translated into lower overstock lifting Q4 gross margin by 1.2pp | |
to 39.4% with inventory being down c. 20%, Q4 adj. EBIT +25% yoy to EUR 183m | |
The partner business demonstrated strong performance in Q4 continuing its | |
03 success track | |
Partner Program share at 39.2% in Q4 (+2.8pp YoY), with 62% of all Partner Program | |
items shipped with ZFS (Zalando Fulfillment Solutions) vs 58% in Q4 2022 | |
04 | We exit 2023 with a strong cash position of EUR 2.5bn |
Strong free cash flow generation of 684m in FY 2023 driven by higher net income and | |
lower inventories. Cash position at EUR 2.5bn | |
05 | In 2024 we return to growth, continue to increase profitability and invest in |
future growth |
GMV and revenue growth of 0% - 5% and 0% - 5% respectively, adj EBIT in the range of EUR 380m to EUR 450m, CAPEX of EUR 250 - 350m and negative net working capital
2
Zalando Q4/23 | Full year results |
We delivered on our revised 2023 guidance
Despite continued weak consumer demand even during peak trading, we delivered adjusted EBIT at the top end of our initial guidance2
Growth
Profitability
Cash
GMV
Revenue
Adjusted EBIT1 (in EUR m)
Capex
(in EUR m)
Net working capital (in EUR m)
FY 2023 Revised 2023 guidance
(1.1)% (2)% - 1%
(1.9)% (3)% - (0.5)%
349.9 300 - 350
263.2 260 - 300
(441.8) negative
3 | ¹ Excludes equity-settledshare-based payment expense ("SBC"), restructuring costs, non-operatingone-time effects and | |
2 | acquisition-related expenses | |
Initial GMV guidance at 1% - 7%, Revenue guidance at (1)% - 4%, Adj. EBIT at EUR 280 - 350m, CAPEX at EUR 300 - 380m |
Zalando Q4/23 | Group performance |
Delivering significant profitability improvement in an ongoing challenging online market environment
Group GMV1
(in EUR m)
(2.6)%
Q4
Group revenue
(in EUR m)
(3.5)%
Group adjusted EBIT
(in EUR m, margin in % of revenues)
Adj.
EBIT margin
4.6%6.0%
FY
4,5694,450
(1.1)%
14,78914,632
3,1683,056
(1.9)%
146 | 183 | ||
Adj. | |||
EBIT | |||
margin | 1.8% | 3.5% |
10,34510,143
185
350
20222023
20222023
20222023
4 1 Gross Merchandise Volume after Returns (GMV): dynamically reported
Zalando Q4/23 | Customer metrics |
Decrease in active customer base from lower new customer acquisition, GMV per active customer continues to increase
Active customers
(L12M1 in millions)
(3.3%)
51.2 | 49.6 |
Q4/22Q4/23
- 1 L12M = last twelve months
2 Defined as GMV divided by the number of orders
3 Defined as GMV divided by the number of active customers
Average orders per active customer
(L12M1 in #)
Average basket size after returns2
(L12M1 in EUR)
GMV per active customer3
(L12M1 in EUR)
(3.1)%
5.14.9
5.5%
56.659.8
2.3%
288.6295.2
Q4/22Q4/23
Zalando Q4/23 | Customer metrics |
Macro environment and focus on profitable growth reflected in customer cohort dynamics
Cohort1 Development in GMV
(in EUR m)
2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||
Before 2019 | 2020 Cohort | 2021 Cohort | 2022 Cohort | 2023 Cohort | |||||||||
6 1 Cohort refers to customers grouped by the calendar year in which they first placed an order with Zalando. Bar shows EUR m GMV.
2023
Zalando Q4/23 | Segment revenue |
DACH Fashion Store, Offprice and all other segments broadly flat
Revenue1 (EUR m) - % growth yoy
Fashion Store | Fashion Store - DACH | ||||||||
GMV | GMV | ||||||||
(0.6)% | |||||||||
(4.1)% | (1.6)% | ||||||||
(3.2)% | |||||||||
1,105 | 1,098 | ||||||||
Fashion Store - Rest of Europe
2,590 | 2,482 | GMV | ||
(6.8)% | ||||
(4.4)% | ||||
1,484 | 1,384 | |||
Q4/22 | Q4/23 | |||
Q4/22 | Q4/23 |
- 1 Q4/23 contains EUR (84)m | Q4/22 EUR (87)m reconciliation of internal revenues. Q4/22 Fashion Store revenues restated. All other segments include Highsnobiety.
Offprice
(1.2)%
537530
All other segments
(0.3)%
128128
Q4/22 Q4/23
Zalando Q4/23 | Segment adjusted EBIT |
Significant step up in profitability in DACH and Rest of Europe
Adjusted EBIT1 (EUR m) - margin in % of revenue | |||
Fashion Store | Fashion Store - DACH | ||
3.6% | 6.7% | 8.3% | 10.8% |
92 | 119 | ||
Fashion Store - Rest of Europe
167
0.1% | 3.5% | |||
94 | ||||
2 | 49 | |||
Q4/22 | Q4/23 | Q4/22 | Q4/23 |
Offprice
6.0%0.5%
323
All other segments
20.0% 13.7%
2617
Q4/22Q4/23
- 1 Q4/23 contains EUR (4.9)m | Q4/22 contains EUR (5.9)m reconciliation of internal EBIT. All other segments include Highsnobiety.
Zalando Q4/23 | Group P&L |
Improvement in gross margin and continued efficiency gains in fulfillment drive adjusted EBIT expansion in Q4
Costs and margins | FY/22 | FY/23 | YoY ∆ |
(in % of revenue) | |||
Gross profit | 39.2% | 38.7% | (0.5)pp |
Fulfillment costs | (26.2)% | (24.2)% | 2.0pp |
Marketing costs | (7.7)% | (7.4)% | 0.3pp |
Administrative expenses & Other | (4.5)% | (5.2)% | (0.7)pp |
EBIT | 0.8% | 1.9% | 1.1pp |
Adjusted EBIT 1 | 1.8% | 3.5% | 1.7pp |
Q4/22 | Q4/23 | YoY ∆ | |
38.1% | 39.4% | 1.2pp | |
(22.9)% | (22.0)% | 0.9pp | |
(7.9)% | (8.3)% | (0.4)pp | |
(4.4)% | (4.2)% | 0.2pp | |
3.0% | 4.9% | 1.9pp | |
4.6% | 6.0% | 1.4pp | |
Focus on profitable growth during peak trading and prudent wholesale buy
Improved order economics and scaling of our partner business more than offsetting higher transportation cost
- 1 Excluding equity-settledshare-based payment expense ("SBC"), restructuring costs, non-operatingone-time effects and acquisition-related expenses
Zalando Q4/23 | Net working capital |
Normalised inventory levels result in improvement of net working capital
Net working capital (end of Q4)
(in EUR m and % of annualized revenue) | EUR m | Q4/22 | Q4/23 | YoY ∆ | |||
(212) | Conservative wholesale | ||||||
Inventories | 1,810 | 1,441 | (20.4)% | ||||
buy and reduced | |||||||
(1.7)% | overstock | ||||||
(442) | Trade receivables | 913 | 899 | (1.5)% | |||
Trade payables | 2,934 | 2,782 | (5.2)% | ||||
(3.6)% | |||||||
Net working capital | (212) | (442) |
Q4/22Q4/23
10
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Zalando SE published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 April 2024 13:49:03 UTC.
