Executive Summary

• In 2Q18, Zalando grew revenues by 20.9% year over year, but undershot expectations on revenues and EPS.
• Greater discounting negatively impacted the gross margin, while an increase in fulfillment costs and investments in services for customers prompted a year-over-year erosion in the EBIT margin.
• Management adjusted its guidance for FY18, stating that it expects full-year revenue growth to be in the lower half of its of previously stated 20%–25% target range. Guidance for FY18 adjusted EBIT was similarly lowered.