Is Zalando Worth €8.5bn? IPO Rumours Abound as Sales Soar 50 Percent

By David Knight |

Rumours of a potential IPO for Zalando are growing as the German e-commerce giant reported soaring revenues in 2013. The company saw net sales surge 50 percent to €1.8 billion, with the core German-speaking region (known as DACH) accounting for a billion of that. It is, however, still making an overall operating loss.

Although the Berlin-based company has been non-committal about plans to go public, many have reported that IPO can be expected this year – with the Wall Street Journal reporting the six-year-old company could have a potential value of a whopping €8.5 billion.

Zalando is now Europe’s largest online retailer as growth in its existing shoe and clothing business as well as successful expansion into seven new markets saw revenues up by around €600 million from 2012. The company reported that all international regions saw double-digit sales growth, and Q4 of 2013 saw more than 300 million shop visits.

Robert Gentz, a member of Zalando’s management board, said: “2013 was another strong year for us and underlined our leading position in Europe’s fashion e-commerce.

Zalando’s EBIT, or earnings before interest and taxes, improved marginally by around 0.5 percent from minus 7.2 percent in 2012. In a release, the company put this down to “challenging weather conditions in 2013” leading to high discount levels in the market, and a decision to “continue strategic initiatives in 2013 as the basis for continued growth and improved customer experience” leading to increased costs in areas such as “fulfillment and technology.”

The company did, however, maintain its break-even level in the DACH region, and the average return rate was stable at around 50 percent. Another big plus was an increase of mobile visits, with more than 35 percent form tablet and smartphone. Zalando also retains significant cash reserves worth over €350 million at the end of 2013.

It was reported earlier this month that Zalando had chosen three banks – Goldman Sachs, JP Morgan and Morgen Stanley – to advise them ahead of an IPO later this year. But according to the WSJ, CEO Rubin Ritter was non-committal about the plans, with the newspaper quoting him as saying: “An IPO could be an interesting option in the future, but no decision has been made.”