Is Rising Revenue but Declining Profit Reshaping the Investment Case for Zalando (XTRA:ZAL)?

• Zalando SE recently reported its third quarter 2025 earnings, revealing sales of €3,020.6 million and net income of €14.8 million, both increased and decreased respectively compared to the previous year, and also announced the upcoming appointment of Anna Dimitrova as Chief Financial Officer, effective January 1, 2026.
• While sales grew year-over-year for both the quarter and nine-month period, the company’s net income and earnings per share were lower, sparking ongoing discussion about Zalando's margins and profitability trajectory.
• With Zalando's revenue rising but net income narrowing in the latest results, we will examine how this financial performance influences its investment narrative.

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Zalando Investment Narrative Recap

To own Zalando shares, investors need confidence in the company's ability to convert strong revenue growth into sustained profit expansion, even as ongoing gross margin pressure and muted European consumer demand remain key risks. The third quarter’s sales increase is a short-term positive, but the marked decline in net income means the report does not materially alter the primary catalyst, realizing efficiency gains from platform integration, or the major risk, which is margin compression outpacing revenue growth.

Among recent announcements, Zalando's appointment of Anna Dimitrova as CFO stands out for its potential relevance to financial discipline and margin improvement, areas closely watched given the latest results. Her arrival coincides with a critical period where execution on cost control and margin stabilization may influence Zalando’s ability to deliver against growth ambitions.

By contrast, with net income trailing sales growth and margin worries persisting, investors should be aware of the risk that...

Read the full narrative on Zalando (it's free!)

Zalando's narrative projects €15.3 billion in revenue and €545.4 million in earnings by 2028. This requires 11.8% yearly revenue growth and a €274.7 million earnings increase from €270.7 million today.

Uncover how Zalando's forecasts yield a €36.85 fair value, a 56% upside to its current price.

Exploring Other Perspectives

Nine community fair value estimates for Zalando range broadly from €36.68 to €83.41 per share, highlighting contrasting outlooks within the Simply Wall St Community. While some anticipate upside from platform efficiencies, ongoing margin pressure remains a concern that could impact future returns, consider exploring how your own perspective aligns with these differing expectations.

Explore 9 other fair value estimates on Zalando - why the stock might be worth over 3x more than the current price!

Build Your Own Zalando Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zalando research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Zalando research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zalando's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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