Zalando beats first-quarter sales forecast despite 'cautious' consumers

By Helen Reid

LONDON (Reuters) -European online fashion retailer Zalando reported first-quarter revenue that was stronger than expected thanks to additional customers and a good start to spring and summer sales, and confirmed its 2025 guidance.

The multi-brand platform that sells clothes, shoes and accessories said group revenue grew 7.9% to 2.42 billion euros ($2.74 billion) in the three months ended March 31, beating analysts' average forecast of 2.367 billion.

Zalando has been moving upmarket and adding more designer brands to its offering as cut-price fast-fashion platforms like Shein intensify competition at the lower end, and said it added LVMH-owned brand Marc Jacobs in the first quarter.

Zalando stuck to its forecast for 2025 despite what it called a "fast-changing geopolitical and macroeconomic environment," as U.S. tariffs and retaliation from other countries have driven many retailers to cut expectations.

"Consumers obviously are still cautious but they also keep spending, we've enjoyed growth really across all our markets in Q1 and that makes us confident we will be able to drive the acceleration we are aiming for this year," Zalando co-CEO David Schroeder said in a call with journalists.

Shein and Temu, hit by U.S. tariffs on Chinese goods and removal of a duty-free exemption for ecommerce packages, have hiked spending on advertising in Europe as they shift away from the U.S., but Schroeder shrugged off the intensifying competition in its home market.

"So far we haven't seen any impact on our business," he said, adding: "We have made a clear choice to focus on high quality, multi-brands fashion and lifestyle."

Gross merchandise volume, a measure of the total goods sold on Zalando, was up 6.5% in the first quarter to 3.5 billion euros.

Zalando expects a rise of 4% to 9% in revenue and gross merchandise volume in 2025, and adjusted earnings before interest and tax (EBIT) of 530 million to 590 million euros.

Shares in Zalando jumped 5% at market open but fell back to trade flat by 0745 GMT.

The number of active customers rose to a new high of 52.4 million, up from 49.5 million in the first quarter last year, and adjusted EBIT was 46.7 million euros in the first quarter, up from 28.3 million a year ago.

Revenue from Zalando's business selling logistics and software services to other retailers grew 11.6% to 240 million euros.

TikTok Shop, the shopping arm of social media app TikTok, chose Zalando's ZEOS as its "preferred logistics partner" for sellers in Germany, France, and Italy in the first quarter, the company said.

Schroeder said U.S. tariffs could create an opportunity for Zalando's business-to-business offering as brands anticipate weaker demand in the U.S. and pivot to Europe.

"We see brands and retailers really having a larger focus on Europe as a way to also generate additional demand if it gets more difficult to do this in the U.S. ... and we are talking to quite a few brands at the moment on how we can best help them," he said.

($1=0.8831 euros)

(Reporting by Helen Reid; Editing by Clarence Fernandez, Bernadette Baum and David Evans)