What's going on?
Zalando, Europe’s largest online fashion retailer, reported first-quarter sales growth that eclipsed investor expectations on Tuesday – and the stock rose by a trendy 3%.
What does this mean?
Zalando’s sales between January and March were more than 20% higher than last year, helped by more customers shopping more often (and over three quarters of them on mobile). But then came a Zalandoozy, in the form of an extended period of cold, wet and windy weather across Europe in March. The company’s investment in sales and marketing ahead of S/S ‘18 fell flatter than a model in too-tall heels, as customers were more in the mood for sweaters and coats than light pastels and checks.
Why should I care?
For markets: Despite lower-than-expected profits, Zalando’s shares are up.
Zalando’s profits for the quarter came in lower than expected, but investors clapped anyway. The profit slip may have been seen as a weather-related one-off, likely to be made up for by the rest of the year. What’s more, Zalando started selling over 1,000 beauty products last quarter, adding further growth (investors’ little black dress when it comes to ecommerce companies) and profit potential. In fashion, unpredictable fit and customer caprice can lead to high rates of expensive returns; but in beauty, this happens much less (since you often can’t return a product once it’s opened) – which should mean higher profits in the future.
The bigger picture: Ecommerce companies are suiting up.
On Friday, Flipkart approved Walmart’s offer to buy 75% of its shares. On Tuesday, meanwhile, China’s Alibaba announced a deal to acquire South Asian ecommerce business Daraz, continuing its acquisition-led sprawl across Asia. On top of this, its local rival JD.com reported profits below expectations, citing higher investment in technology research, international expansion and logistics. That’s all.