TLDR
- Zalando shares surged more than 12% following better-than-expected Q4 profit results
- Annual revenue reached €12.3 billion, representing 16.8% growth versus prior year
- Company unveiled €300 million share repurchase program, approximately 5% of total market capitalization
- Customer base expanded to 62 million active users from 51.8 million, aided by ABOUT YOU integration
- Strategic Levi Strauss e-commerce collaboration unveiled spanning US, Canadian, and European markets
Zalando delivered a triple punch of market-moving news on Thursday. The Berlin-based online fashion retailer released annual financials, unveiled a substantial share buyback initiative, and announced a strategic partnership with Levi Strauss — all within a single morning. Investors rewarded the company with a share price spike exceeding 12%.
The company’s 2025 full-year revenue totaled €12.3 billion, marking 16.8% annual expansion. While this figure came in marginally under the analyst consensus of €12.4 billion, the minor miss didn’t dampen market enthusiasm.
Adjusted EBIT reached €591 million, surpassing the €580 million consensus forecast by 1.9%. Gross merchandise value — representing total platform transaction volume — increased 14.7% to €17.6 billion, exceeding projections by 0.7%.
The share repurchase initiative captured significant attention. With a ceiling of €300 million, the buyback represents approximately 5% of Zalando’s current market capitalization. Management stated the program will be financed through internal cash generation, with repurchased shares slated for cancellation.
Barclays, maintaining an “overweight” rating and €35 target price, characterized the performance as “very solid” and suggested the buyback “should be well received by investors who have been pushing for capital returns.”
Active Customers Hit 62 Million
The ABOUT YOU acquisition — finalized in July 2025 — continues delivering measurable impact across Zalando’s key metrics. The active customer count climbed to 62 million from 51.8 million in the prior year, with the acquisition driving much of this expansion.
The B2B division delivered particularly impressive performance. This segment generated 14.6% revenue growth to €1.1 billion, while adjusted EBIT more than doubled year-over-year.
However, not every metric impressed. Reported net income of €213 million fell short of expectations. Analysts attributed this gap to €111 million in exceptional charges, encompassing €57 million in acquisition-related expenses and €43 million in restructuring costs.
Gross margins contracted approximately 170 basis points year-over-year during Q4, driven by increased promotional activity, loyalty program investments, and integration effects from the ABOUT YOU transaction.
Levi’s Deal and 2026 Outlook
Zalando’s technology arm, Scayle, announced a significant partnership with Levi Strauss. The denim giant will deploy Zalando’s commerce technology platform throughout the US, Canada, and Europe — substantially extending Zalando’s B2B reach beyond European borders. J.P. Morgan noted the deal was “very well received by investors given the profile and scale of the client.”
Looking toward 2026, management provided guidance calling for GMV between €19.7–20.6 billion and revenue of €13.8–14.4 billion. These projections translate to GMV and revenue expansion of 12–17% on a reported basis.
Adjusted EBIT is projected at €660–740 million, with the midpoint landing roughly 3% above the €678 million analyst consensus. The company also lowered its capital expenditure guidance, reducing the capex-to-sales ratio target from 3% to 2%.
Management reaffirmed medium-term GMV and revenue growth targets of 5–10% extending through 2028. Additionally, the company now anticipates €100 million in ABOUT YOU-related synergies by 2028 — accelerating the timeline by one year compared to initial projections.
Jefferies analyst Frederick Wild said the strong end to 2025 “should act as a reminder of the earnings growth Zalando has on offer.”
