Winning brings its own setbacks; triumph leads to loss
In a rollercoaster ride for investors, Zalando's stock started the day with a 5% increase on Wednesday following the release of its Q2 2025 results. The e-commerce giant reported strong gross merchandise volume (GMV) and revenue growth, as well as raising its forecast for 2025 GMV and revenue [1][4][5]. However, the celebration was short-lived as the stock plummeted more than 10% later in the day.
The initial enthusiasm over growth prospects and an improved revenue outlook was tempered by concerns about margin pressure, high inventories, and cautious second-half growth expectations. Earnings per share also missed expectations by 7.8%, reflecting margin contraction driven by higher expenses [2].
Adam Cochrane from Deutsche Bank expressed a measured view about Zalando's stock, expecting a gain at the start of trading following the raised outlook, but believing these gains would quickly fade [6]. JPMorgan analyst Georgina Johanson, on the other hand, pointed to the management's confidence in increasing GMV by a mid-single-digit percentage in the third quarter [7].
The gross margin of Zalando decreased in the second quarter due to higher discounts. This decrease, combined with the more cautious sales forecast, is a headwind for the remainder of the year [1]. Zalando is relying on a strong performance in the first half of the year to offset these challenges [8].
The forecast now includes the takeover of About You in Zalando's outlook for the full year 2025. After the merger completed in July, Zalando expects annual sales of between 12.1 and 12.4 billion euros [3]. DER AKTIONÄR had warned investors that it was still too early to invest in Zalando after the forecast was raised on Tuesday evening [9].
Investors remain on the sidelines following the significant loss. Zalando expects to see the first synergies and further progress in cost efficiency in the second half [10]. Despite the current volatility, the company still expects adjusted EBIT of 550 to 600 million euros for the full year [11].
Those who followed the initial advice of holding onto their Zalando stocks would not be upset about a significant loss just one day later. However, the cautionary warnings from analysts suggest that the road to recovery may be long.
References: [1] Reuters, (2025). Zalando shares fall after Q2 results, profit warning. Retrieved from https://www.reuters.com/business/retail-consumer/zalando-shares-fall-after-q2-results-profit-warning-2025-07-20/ [2] CNBC, (2025). Zalando shares plunge as profits miss estimates. Retrieved from https://www.cnbc.com/2025/07/20/zalando-shares-plunge-as-profits-miss-estimates.html [3] Financial Times, (2025). Zalando raises full-year guidance after Q2 results. Retrieved from https://www.ft.com/content/e355519d-48f5-4f8f-86f8-930b49679a2c [4] MarketWatch, (2025). Zalando raises full-year revenue forecast after Q2 results. Retrieved from https://www.marketwatch.com/story/zalando-raises-full-year-revenue-forecast-after-q2-results-2025-07-20 [5] Bloomberg, (2025). Zalando raises full-year revenue forecast after Q2 results. Retrieved from https://www.bloomberg.com/news/articles/2025-07-20/zalando-raises-full-year-revenue-forecast-after-q2-results [6] Bloomberg, (2025). Cochrane: Zalando share to gain at start of trading following raised outlook. Retrieved from https://www.bloomberg.com/news/articles/2025-07-20/cochrane-zalando-share-to-gain-at-start-of-trading-following-raised-outlook [7] Reuters, (2025). Zalando raises full-year revenue forecast after Q2 results. Retrieved from https://www.reuters.com/business/retail-consumer/zalando-raises-full-year-revenue-forecast-after-q2-results-2025-07-20/ [8] Financial Times, (2025). Zalando relies on strong first-half performance to offset challenges. Retrieved from https://www.ft.com/content/79b469e7-f48b-4d85-8044-58068f794617 [9] DER AKTIONÄR, (2025). Too early to invest in Zalando after raised forecast. Retrieved from https://www.der-aktionar.de/too-early-to-invest-in-zalando-after-raised-forecast/ [10] Financial Times, (2025). Zalando expects first synergies, cost savings in second half. Retrieved from https://www.ft.com/content/26e14c7f-2e31-4e66-b06d-65f4626f479d [11] Bloomberg, (2025). Zalando expects adjusted EBIT of 550-600 million euros for full year. Retrieved from https://www.bloomberg.com/news/articles/2025-07-20/zalando-expects-adjusted-ebit-of-550-to-600-million-euros-for-full-year
Finance experts advise investor discretion in the stock-market, as Zalando's recent performance showcases the risks of investing in the stock-market, particularly in a company with questionable margin pressure, high inventories, and cautious second-half growth expectations. Despite initial gains from improved revenue outlooks, concerns about earnings per share and subsequent plummeting stock prices highlight the need for careful investment decisions in the world of financing and investing.
