Key Highlights
- Zalando shares climbed more than 12% following fourth-quarter profit results that exceeded forecasts
- Annual revenue reached €12.3 billion, representing a 16.8% increase compared to the previous year
- The company unveiled a €300 million share repurchase program, representing approximately 5% of its market capitalization
- The platform’s active customer base expanded to 62 million from 51.8 million, driven by the ABOUT YOU acquisition
- Strategic partnership with Levi Strauss announced to power e-commerce operations in the US, Canada, and Europe
Thursday proved eventful for Zalando. The Berlin-based online fashion retailer released its annual financial results, unveiled plans for a €300 million share buyback program, and announced a strategic partnership with Levi Strauss — a trio of announcements that sent shares climbing over 12%.
Annual revenue for 2025 totaled €12.3 billion, marking a 16.8% year-over-year increase. While this figure came in slightly under the €12.4 billion analyst consensus, the minor variance had minimal impact on investor sentiment.
Adjusted EBIT reached €591 million, surpassing the €580 million consensus estimate by 1.9%. Gross merchandise value — representing the total worth of products transacted through the platform — rose 14.7% to €17.6 billion, exceeding projections by 0.7%.
The share repurchase program captured significant attention. With a value reaching €300 million, the buyback accounts for roughly 5% of Zalando’s current market capitalization. Management stated the program will be financed through operating cash flow, with repurchased shares to be cancelled.
Barclays, maintaining an “overweight” rating and €35 price target on the stock, characterized the results as “very solid” and noted the buyback “should be well received by investors who have been pushing for capital returns.”
Customer Base Expands to 62 Million
The acquisition of ABOUT YOU — finalized in July 2025 — continued influencing Zalando’s performance metrics. Active customers increased to 62 million compared to 51.8 million in the prior year, with the acquisition contributing substantially to this growth.
The business-to-business division delivered impressive results. Revenue increased 14.6% to €1.1 billion, while adjusted EBIT more than doubled.
One area of underperformance was reported net income, which came in at €213 million below analyst expectations. This shortfall stemmed from €111 million in exceptional items, comprised of €57 million in acquisition-related costs and €43 million in restructuring expenses.
Gross margin compression of approximately 170 basis points occurred in the fourth quarter on a year-over-year basis, attributed to increased promotional activity, loyalty program investments, and the integration effects of ABOUT YOU.
Levi’s Partnership and Forward Guidance
Zalando’s technology division, Scayle, secured a partnership with Levi Strauss. The denim brand will deploy Zalando’s commerce technology across its operations in the US, Canada, and Europe — a development that significantly extends Zalando’s B2B presence beyond its traditional geographic stronghold. J.P. Morgan described the partnership as “very well received by investors given the profile and scale of the client.”
Looking ahead to 2026, management provided guidance for GMV between €19.7–20.6 billion and revenue spanning €13.8–14.4 billion. These projections suggest GMV and revenue expansion of 12–17% on a reported basis.
Adjusted EBIT guidance stands at €660–740 million, with the midpoint approximately 3% above the €678 million analyst consensus. Additionally, the company reduced its capital expenditure-to-sales ratio target from 3% to 2%.
Zalando reaffirmed its medium-term outlook for GMV and revenue growth of 5–10% extending through 2028. Management also indicated expectations for €100 million in synergies from the ABOUT YOU acquisition by 2028 — accelerated by one year from initial projections.
Jefferies analyst Frederick Wild said the strong end to 2025 “should act as a reminder of the earnings growth Zalando has on offer.”
