TLDR
- Zalando shares surged more than 12% following better-than-expected Q4 profitability
- Annual revenue reached €12.3 billion, representing 16.8% growth versus prior year
- Company unveiled €300 million share repurchase program, approximately 5% of total market capitalization
- Customer base expanded to 62 million active users from 51.8 million, driven by ABOUT YOU integration
- Strategic Levi Strauss e-commerce collaboration announced spanning US, Canada, and European markets
Zalando delivered multiple market-moving announcements on Thursday. The German online fashion retailer released annual results, unveiled a €300 million share buyback initiative, and confirmed a strategic partnership with Levi Strauss — all in a single morning. Investors responded enthusiastically, pushing shares up over 12%.
Annual 2025 revenue totaled €12.3 billion, marking 16.8% growth compared to the previous year. While this fell marginally short of the €12.4 billion analyst projection, the minor miss didn’t dampen investor enthusiasm.
Adjusted EBIT reached €591 million, surpassing the €580 million analyst consensus by 1.9%. Gross merchandise value — representing total platform transaction volume — increased 14.7% to €17.6 billion, exceeding forecasts by 0.7%.
The share repurchase program captured significant attention. The €300 million allocation equals roughly 5% of Zalando’s current market capitalization. Management confirmed the repurchased shares will be retired, with funding sourced from operational cash generation.
Barclays, maintaining an “overweight” rating and €35 price target, described the performance as “very solid” and noted the buyback “should be well received by investors who have been pushing for capital returns.”
Active Customers Hit 62 Million
The ABOUT YOU transaction — finalized in July 2025 — continued transforming Zalando’s operational metrics. The active customer count climbed to 62 million from 51.8 million year-over-year, with the acquisition accounting for much of the expansion.
The business-to-business segment delivered impressive performance. Revenue increased 14.6% to €1.1 billion, while adjusted EBIT more than doubled.
However, reported net income of €213 million fell below expectations. This gap stemmed from €111 million in exceptional charges, including €57 million related to acquisition expenses and €43 million in restructuring costs.
Gross profit margins contracted approximately 170 basis points year-over-year during Q4, attributed to increased promotional activity, loyalty program investments, and ABOUT YOU integration effects.
Levi’s Deal and 2026 Outlook
Zalando’s technology division, Scayle, finalized an agreement with Levi Strauss. The denim giant will implement Zalando’s commerce infrastructure across US, Canadian, and European operations — significantly extending Zalando’s B2B presence beyond its core German market. J.P. Morgan described it as “very well received by investors given the profile and scale of the client.”
Looking toward 2026, Zalando projects GMV between €19.7–20.6 billion and revenue spanning €13.8–14.4 billion. These targets indicate GMV and revenue expansion of 12–17% on a reported basis.
Adjusted EBIT guidance sits at €660–740 million, with the midpoint landing approximately 3% above the €678 million analyst consensus. The company also reduced its capital expenditure-to-sales ratio target from 3% to 2%.
Zalando reaffirmed medium-term GMV and revenue growth targets of 5–10% extending through 2028. Additionally, management now anticipates €100 million in ABOUT YOU synergies by 2028 — accelerated by one year versus 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.”
