Zalando (XTRA: ZAL) 2018 Capital Markets Day: Doubling Sales—Margins Can Wait

Executive Summary

Coresight Research attended Zalando’s Capital Markets Day 2018 in Berlin, Germany, on June 5. Our top takeaways from the meeting include:

• Zalando is “on track” to double its sales from 2017 levels by 2020, according to Co-CEO Rubin Ritter. The investment needed to achieve this growth means that the company is unlikely to report any meaningful expansion in margins in the next few years.
• A number of speakers noted that short-term margin sacrifices to enable services such as improved delivery can end up boosting customer lifetime value.
• Zalando continues to aim for broad appeal and plans to offer an “unlimited assortment” by adding beauty products, bringing more brands on board and building out its special-size options.
• Through innovative services, the company is attempting to drive out friction in payments, delivery and returns.