Zalando ETR: ZAL reported a strong start to 2026, citing double-digit reported growth, higher profitability, and continued progress on strategic priorities spanning consumer apps, its B2B platform, and AI-driven initiatives. Management also reiterated full-year guidance despite what co-CEO Robert Gentz described as “ongoing geopolitical instability and economic volatility” across its markets.
Q1 highlights: growth, profitability, and strategy execution
On the call, Gentz said the company “successfully executed our strategy and met our financial goals,” pointing to progress across distribution, customer frequency and monetization, as well as advances in the technology platform supporting both B2C and B2B operations.
Gentz highlighted five Q1 priorities, including reported growth and profitability improvement, traction in AI capabilities, strong growth across its “team of consumer apps,” ongoing double-digit growth in B2B, and a reaffirmation of 2026 targets.
At a group level, management said reported gross merchandise volume (GMV) increased nearly 22% and revenue rose nearly 24% year-over-year. Adjusted EBIT increased 39% year-over-year to €65 million, with an adjusted EBIT margin of 2.2%.
AI initiatives: assistant usage, robotics rollout, and onboarding automation
Gentz framed AI as a catalyst “for both growth and efficiency,” arguing the company’s shared data and infrastructure engine benefits from increasing consumer engagement and deeper brand integration. He provided several recent examples of AI deployment across the business.
- AI assistant expansion: Gentz said the company is evolving its AI-based assistant “from a chat tool into a true lifestyle companion,” expanding beyond fashion into sports and beauty advice. He added that 10 million customers interacted with the AI assistants last quarter, up from 6 million in all of 2025.
- Warehouse automation: The company is rolling out AI-powered robots across its European fulfillment network. Gentz said 2 million items per month are already handled autonomously by warehouse robots, with broader rollout aimed at improving throughput, scalability, and efficiency.
- Partner article onboarding: Zalando introduced computer-vision tools to detect and correct image backgrounds and enrich missing product information, including material composition data. Gentz said the company now corrects about 6,000 article pictures daily and that up to 85% of articles are ready to go online in under three days.
In Q&A, Gentz said newer cohorts acquired during recent AI-led improvements show “no significant difference” in behavior versus past cohorts, though he noted increased engagement tied to an AI-based feed that surfaces inspiring content, contributing to “more visits” within the Zalando app.
Financial performance: pro forma growth, synergies, and segment margins
CFO Anna Dimitrova said reported GMV and revenue increases were supported by “solid underlying growth in Zalando and the inclusion of About You.” On a pro forma basis, she said GMV increased 6% to €4.3 billion, with revenue up 3.4% to €3.0 billion. Dimitrova attributed the difference between GMV and revenue growth to faster expansion in partner business, where the company records commissions rather than the full value of sales.
Adjusted EBIT rose to €65 million, and Dimitrova said the company delivered €10 million in synergies in Q1 and remains on track for €40 million in synergies for the year. She also said Zalando standalone adjusted EBIT margin improved to 2.5% from 1.9%, while About You generated positive adjusted EBIT after synergies—which she described as the first time About You achieved positive adjusted EBIT in the first quarter.
B2C: Dimitrova said GMV growth was strong across all three consumer apps. She pointed to a strong start to the spring/summer season and particularly strong growth in lifestyle categories including sports, kids and family, and beauty. Pro forma B2C revenue rose 2.1% to €2.7 billion, reflecting what she called a strategic shift in mix toward partner business. Zalando’s standalone partner business share increased to 36.6% (up 2.2 percentage points), though About You’s consolidation diluted the group share to 31.8%. Over time, Dimitrova said the company expects GMV growth to outpace revenue growth as it targets a partner business share of 40%–50% of total GMV by 2028.
Retail media contributed to revenue growth, with retail media revenues rising to 1.7% of B2C GMV. Customer metrics improved as well: active customers reached 62.3 million (up close to 10 million year-over-year) and average spend per customer rose 2.9% to €305. Dimitrova added that close to 6 million customers use both Zalando and About You.
B2C gross profit rose 22.5% to more than €1.1 billion, while B2C gross margin was 41.5%, down 0.6 percentage points year-over-year due primarily to About You’s lower margin. Dimitrova said Zalando B2C increased gross margin by 0.5 percentage points, citing inventory clearing via Zalando Lounge and data-driven discounting. B2C adjusted EBIT was €38 million with a margin of 1.4%, with margin pressure attributed mainly to About You dilution and higher fulfillment costs linked to network consolidation and new logistics site ramp-ups.
B2B: Dimitrova said B2B revenue grew nearly 24% on a reported basis and 16.6% pro forma. Growth was driven by ZEOS Fulfillment, including Zalando Fulfilment Solutions and Multi-Channel Fulfillment; she also cited momentum in Multi-Channel Fulfillment tied in part to collaborations such as with British retailer Next. Scayle’s inclusion lifted software revenues. B2B gross margin expanded 5.8 percentage points to 18.2%, while adjusted EBIT increased more than fourfold to €26 million and the margin rose to 8.6%.
Dimitrova said the B2B margin benefited from (1) scale and efficiency gains in ZEOS Fulfillment, (2) higher-margin software revenue from Scayle, and (3) a €4 million one-off provision release. Excluding the provision release, she said B2B margin would have been 7.4%. Later in Q&A, she added that the “17%, 18%” B2B gross margin range seen in Q1 is what the company expects going forward.
Costs, restructuring, and cash flow items
On group cost lines, Dimitrova said gross margin at the group level was stable, while fulfillment costs rose 0.6 percentage points due to About You consolidation and transition costs tied to logistics network consolidation and new site ramp-ups. Marketing costs rose 0.1 percentage points, driven by About You’s inclusion, while admin costs decreased 0.8 percentage points due to operational efficiencies.
Other operating expenses increased due to a €97 million restructuring charge related to the logistics network reshaping announced in January and additional restructuring measures. These were excluded from adjusted EBIT. Dimitrova said total EBIT adjustments were €144.5 million in Q1 and reiterated expectations for approximately €300 million of adjustments for the full year, with the remainder “distributed relatively evenly” across the next three quarters. She also said integration costs were expected to be in the “mid-digit million” range across the whole period, with the largest portion due in 2026.
Cash and cash equivalents ended Q1 at around €1.3 billion, which Dimitrova said aligns with the company’s liquidity buffer framework. She noted Q1 typically has cash outflow and said this year’s outflow was more elevated due to partner payables following strong Cyber Week trading. The company also recorded a €62 million cash outflow from its share buyback, with about €240 million remaining at the end of March.
Outlook: guidance reiterated; focus on logistics transition and margins
Gentz said the company had a strong start to the spring-summer season and that consumer demand “persists despite a volatile geopolitical” environment. Management reiterated 2026 guidance previously provided in March.
In Q&A, Dimitrova said the logistics network reshuffling—ramping up modern sites and ramping down sites slated for closure—is planned to be executed in H1, with consolidation benefits expected to start in 2027 and reach full impact in 2028.
On gross margin, Dimitrova said Q2 is expected to be “slightly below” the prior year, with improvement anticipated in the second half, reiterating prior commentary about clearing inventory during the first half. On current trading, she said the company has not seen a measurable impact from the Middle East conflict on consumer demand and confirmed expectations for mid-single-digit pro forma GMV growth in Q2, while noting she could not comment on May and June specifically.
Regarding Scayle, Dimitrova said the company does not disclose Scayle’s revenue growth but described underlying revenue growth as “around 9%” for the quarter. She also said “levels” are not yet in the numbers and will come later as onboarding progresses, expected in H2, and that the take rate has remained the same with no reduction observed.
About Zalando ETR: ZAL
Zalando SE operates an online platform for fashion and lifestyle products. The company operates through Fashion Store and Offprice segments. It provides shoes, apparel, accessories, and beauty products with free delivery and returns, as well as various payment options. The company also sells its products through Lounge by Zalando; and brick-and-mortar outlet stores. It operates in Germany, Austria, Switzerland, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, France, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
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