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Executive Summary

  • Zalando reported 3Q16 revenue growth of 17.1% year over year to €834.8 million, slightly below the consensus estimate of €844.3 million. Revenues in the Germany, Austria and Switzerland division increased 9.7% to €407.1 million and the Rest of Europe region posted year-over-year sales growth of 24.3% to 374.0 million.
  • The gross margin expanded 80 basis points (bps) year over year to 41.4% and SG&A margin declined 480bps to 39.1%. The company reported 3Q16 adjusted EBIT of €19.5 million, corresponding to an adjusted EBIT margin of 2.3%. This marks a clear year-over-year improvement, as Zalando reported an adjusted EBIT decline of €23.5 million and EBIT margin of (3.3)% in 3Q15. Diluted EPS increased to €0.02 in 3Q16 from €(0.12) in 3Q15.
  • Management reiterated that the company expects to deliver FY16 revenue growth at the upper end of its forecast 20.0-25.0% revenue growth range. Zalando expects adjusted FY16 EBIT margin to come in at 5.0-6.0%, a clear improvement from the 3.6% EBIT margin in FY15.

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