Zalando: Europe’s Fashion E-Commerce Giant
Zalando, with a stock price of 28.70 euros, is the largest pure-play fashion and beauty e-commerce platform in Europe. Generating over 10 billion euros in annual sales, the company focuses primarily on the German-speaking DACH region (Germany, Austria, Switzerland). Headquartered in Berlin, Zalando currently employs approximately 15,200 individuals.
The Swedish market saw a surge in Zalando stock ownership after Kinnevik, the company’s former largest shareholder, distributed shares to its investors in 2021. The Danish billionaire Anders Holch Povlsen now holds the largest stake at 10.1%, alongside his ownership in Bestseller, Normal, and Zalando’s competitor ASOS.
Zalando operates on two distinct business models:
– Traditional Retail: Zalando initially operated as a traditional retailer, purchasing products from suppliers and brands to sell directly to customers. This model still accounts for about 60% of the total gross merchandise value sold through Zalando.
– Partner Program: Under this model, suppliers list their products directly on Zalando’s platform, retaining ownership while paying a fee upon sale. This approach expands the product range for customers, reduces inventory risk for Zalando, and provides partners access to a vast customer base of around 50 million active users.
Zalando’s revenues in 2023 totaled 10.1 billion euros, representing the value of products sold through both retail and partner models. The total gross merchandise volume of 14.6 billion euros encompasses sales from both models, with partner sales accounting for approximately 4.5 billion euros.
The company’s profitability is concentrated in the DACH region, where Zalando has established a strong brand presence and efficient logistics network. Despite recent challenges due to the pandemic and rising interest rates, Zalando has shown signs of recovery with improved sales growth and margin expansion.
In the third quarter of 2024, Zalando reported a 8% increase in gross merchandise volume and a 5% growth in revenues compared to the previous year. The bolstered gross margin, driven by a higher share of partner sales and improved inventory management, contributed to a stronger financial performance.
The e-commerce landscape faces intense competition, with new entrants like the Chinese firm Shein rapidly gaining market share in Europe through aggressive pricing and strategic marketing on platforms like Tiktok. As the industry evolves, established players like Zalando must navigate thin margins and fierce competition to sustain growth.
In evaluating e-commerce and fashion companies, Zalando’s valuation stands out with a forward P/E ratio of 23.4x, EV/Ebit multiple of 15.0x, and EV/Sales ratio of 0.6x for 2025. Despite industry challenges, Zalando’s stock presents a potential upside of 25% based on a conservative earnings multiple of 15x.
With a diverse shareholder base, including prominent investors like Anders Holch Povlsen and institutional funds, Zalando remains a key player in the European e-commerce market. As the company adapts to changing consumer trends and competitive pressures, its ability to innovate and capture market opportunities will drive future growth and value creation.