Executive Summary

• Zalando reported 1Q17 group revenue of €980.2 million, up 23.1% on a reported basis and above the consensus estimate of €978.8 million. The company’s gross margin contracted by 50 basis points year over year, to 41.4%, and its adjusted EBIT margin declined to 2.1%. Diluted EPS remained stable at €0.02 in 1Q17.
• A growing customer base that ordered more often translated into strong revenue growth. Continued investment in infrastructure and the customer and brand propositions translated into a decrease in gross margin and operating margin.
• Zalando reiterated its FY17 revenue guidance of 20.0%–25.0% growth. The company expects an adjusted EBIT margin of 5.0%–6.0% for the full year.