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Zalando SE Call Transcript 2019
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Call Transcript
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Zalando. The Starting Point for Fashion.
Q3 / 2019 Earnings Call
October 31, 2019
Highlights and Business Update
Strong financial performance
driven by outstanding traffic and active customer growth
Starting point strategy: Site visits >1bn for the first time and continued outstanding active customer growth
Strong financial performance: GMV +24.6%, revenue +26.7%, adj. EBIT €6.3m
Outlook confirmed: GMV growth of 20% to 25%, revenue growth around 20%, adj. EBIT between €200-225m
Platform transition: Continued strong adoption of our platform services ZFS and ZMS
Sustainability: Becoming a sustainable fashion platform with a net positive impact for people and planet
We continue to deliver against our starting point strategy as we broaden our customer base and create deeper customer relationships…
...and continue to capture market share across Europe based on a highly localized and customer centric approach
GERM ANY
Strengthening our market leadership position by creating deeper customer relationships with Zalando Plus - Plus customers already drive 10% share of GMV in DE after only 2 quarters.
SWEDEN
Continuing on our strong growth trajectory on the back of investments into local assortment and local warehouse.
SPAIN
Developing less mature online fashion market by increasing brand awareness, investing in customer acquisition and driving convenience improvements resulting in significant growth acceleration.
Online Fashion market share rankings in terms of GMV FY2018 (Source: Euromonitor)
CZECH REPUBLIC
Fastest growing country on the back of strong customer proposition and investments in customer acquisition, paving the way towards market leadership (e.g. in CZ acquired 1% of population in July).
do.MORE Strategy 2023:
Becoming a sustainable fashion platform with a net positive impact for people and planet
APPLY PRINCIPLES OF CIRCULARITY And extend the life of
at least 50m fashion products.
UPSKILLING Our employees receive skilling chances that match future work needs
INCREASED ETHICAL STANDARDS We will work only with partners who align with them
products.
Financial Update Q3 / 2019
All regions contributed to strong revenue development
8 (1) YTD/19 (YTD/18) contains -€291m (-€362m) reconciliation of internal revenues; Q3/19 (Q3/18): -€79.4m (-€125.1m)
(2) All other segments including various emerging businesses; private label offering zLabels no longer presented as separate unit since Q2/19
Growth in Active Customers further accelerated
All-time high
All-time high
(1) Defined as GMV divided by the number of orders
9 (2) Defined as GMV divided by the number of active customers Adj. EBIT of €6m in Q3/19 – strong recovery from depressed level of last year
10 (1) Excluding equity-settled share-based payment expense (SBC), restructuring costs and non-operating one-time effects of €47.8m in YTD/19 (YTD/18: €39.1m); Q3/19: €13.2m (Q3/18: €16.8m) (2) YTD/19 (YTD/18) contains €0.6m (€0.8m) reconciliation of internal adj. EBIT; Q3/19 (Q3/18): €0.1m (€-1.3m).
Healthy gross margin improvement due to reversal allowance of defective returns in Q3/18 and good trading environment
Costs and margins1
NWC impacted by preparation for Q4, Capex spend is accelerating towards the end of the year
Outlook
FY 2019 outlook confirmed
Liquidity position
(1) Both Q2/19 and Q3/19 liquidity include investments into short-term deposits with maturity of more than 3 and less than 12 months of €25m, respectively
(2) Includes investments in fixed and intangible assets and payments for acquisitions
16 (3) Includes financing cash flow (€4.1m) and effect of exchange rate on cash and cash equivalents (-€2.8m)
Issued share capital
SHARE INFORMATION (AS OF SEP 30, 2019)
| Issued Share Capital | €252,765,235 |
|---|---|
| Total Number of Shares Outstanding | 252,765,235 |
| Index Listings | MDAX |
| Market Segment | Regulated Market (Prime Standard) |
| Stock Exchange | Frankfurt Stock Exchange |
| Type of Shares | Ordinary bearer shares with no-par value (Stückaktien) |
| Program | # Options outstanding |
Weighted average exercise price (EUR) |
|---|---|---|
| SOP 20111 | 1,346,400 | 5.65 |
| SOP 20131 | 9,275,200 | 15.56 |
| VSOP 2017 | 290.000 | 42.24 |
| LTI 2018² | 5,250,000 | 47.44 |
| VSOP 2018 | 500,000 | 29.84 |
| LTI 2019 | 784,000 | 15.71 |
| Total | 17,445,600 | 25.11 |
STOCK OPTION PROGRAMS MGMT BOARD (AS OF SEP 30, 2019) STOCK OPTION PROGRAMS SENIOR MGMT (AS OF SEP 30, 2019)
| Program | # Options outstanding |
Weighted average exercise price (EUR) |
|---|---|---|
| SOP 20141 | 2,192,677 | 21.10 |
| EIP1 | 3,636,670 | 35.31 |
| VSOP 2017 | 459,166 | 42.24 |
| ZOP | 171,063 | 11.92 |
| Total | 6,495,576 | 30.32 |
Upcoming events
| Date | Event |
|---|---|
| Monday/Tuesday, November 4+5 | Roadshow Switzerland (Geneva and Zurich) |
| Tuesday, November 5 |
Roadshow Frankfurt |
| Tuesday, November 12 | UBS European Conference London |
| Wednesday/Thursday, November 13+14 | Morgan Stanley TMT Conference, Barcelona |
| Monday/Tuesday, November 18 + 19 | Roadshow Australia |
| Thursday, November 21 | Roadshow Hongkong |
| Friday, November 22 | Morgan Stanley's Eighteenth Annual Asia Pacific Summit, Singapore |
| Tuesday, January 14 | German Investment Seminar, New York |
| Tuesday, January 21 | GCC KeplerChevreux, Frankfurt |
| Thursday, February 27 | FY/2019 Results |
Zalando Investor Relations Team
Patrick Kofler – Team Lead IR [email protected]
Nils Pöppinghaus – Manager IR [email protected]
Dorothee Schultz – Junior Manager IR [email protected]
Jan Edelmann – Manager IR [email protected]
Team Contact T: +49 3020 9681 584 Zalando Tamara-Danz-Straße 1 10243 Berlin [email protected] https://corporate.zalando.com/en
Disclaimer
Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties. You should not rely on these fo rward-looking statements as predictions of future events and we undertake no obligation to update or revise these statements. Our actual results may diff er materially and adversely from any forward-looking statements discussed on this call due to a number of factors, including without limitation, risks from macroecon omic developments, external fraud, inefficient processes at fulfillment centers, inaccurate personnel and capacity forecasts for fulfillment centers, hazardous material / conditions in production with regard to private labels, lack of innovation capabilities, inadequate data security, lack of market knowledge, risk of strike and changes in competition levels.
