BERLIN (dpa-AFX) - After a challenging year, online retailer Zalando sees new growth opportunities in the medium term. Although the subdued buying mood of consumers in Europe is likely to continue to have an impact in 2024, business should pick up again in the following years and Zalando should become more profitable. On the stock market, investors seized on the news: Zalando shares rose by almost 13 percent in trading on Wednesday morning. After the slump in 2023, the recovery attempt has now regained some momentum.

As the DAX-listed company announced in Berlin on Wednesday, gross merchandise volume (GMV) and sales are set to increase by an average of five to ten percent per year until 2028. In 2028, Zalando aims to achieve an earnings margin before interest and taxes (EBIT margin) of six to eight percent adjusted for one-off effects, which is significantly higher than recently.

Baader Bank expert Volker Bosse described the new medium-term targets as "encouraging". JPMorgan analyst Georgina Johanan, on the other hand, criticized the fact that the company was no longer talking about double-digit growth rates. However, Zalando had already said goodbye to such above-average growth in its forecasts at the beginning of 2023. Since then, consumers' tight wallets have had a negative impact on business.

The consumer slump is also likely to continue for the time being this year. According to the figures, sales and gross merchandise value are likely to remain at the previous year's level in the worst-case scenario. However, Co-CEO Robert Gentz and CFO Sandra Dembeck are also predicting an increase of up to five percent in the best-case scenario. In addition, adjusted operating profit is expected to rise to between 380 and 450 million euros thanks to further increases in profitability.

From now on, Zalando wants to reorganize its divisions. Previously, the business was split between the various sales channels, such as online and outlet. In future, the company will be divided into two segments with business and private customers, i.e. B2B and B2C. In addition to the online fashion stores including wholesale, the latter also includes the brick-and-mortar outlets and Lounge by Zalando and accounts for the majority of the business.

In 2023, Zalando still had to make up ground in terms of gross merchandise value and sales in the fashion stores. The figures fell both in the DACH region (Germany, Austria and Switzerland) and in all other countries in the "Rest of Europe" sub-segment. Customers preferred to visit the outlets in larger cities or the online lounge, where there are always sales.

Due to the subdued buying mood, the gross merchandise value for the year as a whole fell by 1.1 percent to 14.6 billion euros. Group sales fell by just under two percent to 10.1 billion euros.

However, thanks to cost savings, for example in logistics, operating profit (EBIT) adjusted for non-recurring items jumped significantly from almost 185 million euros to around 350 million euros. In terms of operating profit, Zalando achieved the upper end of its own target range and far exceeded analysts' average estimates. On balance, Zalando earned 83 million euros after 16.8 million in the previous year.

Competitor Inditex also announced its figures for the financial year ending January 2024 in the middle of the week. The Spanish company had significantly increased both sales and profits. The Swedish clothing chain H&M will publish its report for the first financial quarter, which ran from the beginning of December 2023 to the end of February 2024, on March 27./ngu/tav/mis