Zalando experienced a remarkable surge on Thursday as shares of the German fashion e-commerce giant jumped by over 12%. This excitement was driven by a combination of impressive quarterly earnings, a substantial €300 million share buyback announcement, and a strategic partnership with Levi Strauss that is set to enhance its e-commerce offerings.
The company reported full-year revenue reaching €12.3 billion for 2025, reflecting a year-on-year increase of 16.8%. While this figure slightly fell short of the analyst consensus of €12.4 billion, investor sentiment remained positive, particularly in light of the company’s overall growth trajectory.
Moreover, Zalando’s adjusted EBIT climbed to €591 million, surpassing predictions from analysts by approximately 1.9%. The gross merchandise value, representing the total sales on the platform, also saw a healthy increase, rising 14.7% to €17.6 billion, which was again ahead of expectations.
Investors were particularly enthused by the announcement of a €300 million share buyback, accounting for nearly 5% of Zalando’s market capitalization. The company indicated that this buyback would be funded through its available cash flow and that the acquired shares would be canceled thereafter—a move designed to enhance shareholder value.
Leading financial institution Barclays, which holds an “overweight” rating on Zalando’s stock with a price target of €35, described the earnings results as “very solid”. They noted that the buyback should be well received by investors eager for capital returns, signaling confidence in Zalando’s strategic direction.
Customer Base Expansion
A critical driver of Zalando’s growth was the successful acquisition of ABOUT YOU, completed in July 2025. This strategic move contributed significantly to an increase in active customers, which soared to 62 million from 51.8 million over the past year. The enhanced customer base is expected to further bolster Zalando’s market presence.
The company’s B2B division also showcased strong performance, reporting a revenue increase of 14.6% to €1.1 billion, with adjusted EBIT more than doubling amid a growing demand for its services.
However, it wasn’t all rosy; Zalando reported a net income of €213 million, slightly missing the mark due to exceptional costs totaling €111 million—including acquisition expenses and restructuring charges. Furthermore, gross margins dipped by approximately 170 basis points year-on-year during Q4, influenced by increased promotional activity and loyalty program expenses.
Strategic Retail Partnerships and Future Outlook
In a significant new development, Zalando’s software arm, Scayle, secured a partnership with Levi Strauss to deploy its commerce platform across markets in the U.S., Canada, and Europe. The partnership marks a pivotal expansion of Zalando’s B2B capabilities, with J.P. Morgan expressing optimism over the potential of this high-profile client relationship.
Looking ahead to 2026, Zalando has set ambitious targets, forecasting gross merchandise value between €19.7 and €20.6 billion, alongside revenue projections ranging from €13.8 to €14.4 billion. This projection indicates expected growth of 12-17% on a reported basis.
Additionally, the company anticipates an adjusted EBIT between €660 and €740 million for the upcoming year, positioning itself slightly above the anticipated consensus of €678 million. In a strategic shift, Zalando has also revised its capex-to-sales ratio target down from 3% to 2%.
In terms of medium-term guidance, Zalando maintains a GMV and revenue growth target of 5-10% through 2028 and expects to realize €100 million in synergies from the ABOUT YOU acquisition—an achievement now anticipated a year ahead of schedule.
Analysts are optimistic about Zalando’s future trajectory, with Jefferies analyst Frederick Wild stating that the strong performance in 2025 serves as a reminder of the significant earnings growth potential the company possesses.
