Zalando Stock: mwb Research Sees Significant Upside as ABOUT YOU Deal Fuels Q1 Growth

mwb Research reaffirmed its Buy rating and €39.00 price target on Zalando (ETR: ZAL) following a solid first-quarter performance, implying upside of 87.5% from the stock’s €20.80 closing price on Tuesday.

In a note on Wednesday, analyst Alexander Zienkowicz said the German fashion platform delivered results broadly in line with expectations, with gross merchandise value rising 21.7% year-on-year to €4.3 billion, revenue up 23.8% to €3.0 billion, and adjusted EBIT improving 38.7% to €64.8 million.

Reported net income was weighed down by €96.8 million in restructuring costs, including the closure of the Erfurt site, while free cash flow came in at negative €512.9 million due to seasonal working capital effects.

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Zienkowicz noted that headline growth was heavily supported by the consolidation of ABOUT YOU, with pro-forma GMV growth a more moderate 6.0% and revenue growth of 3.4%.

B2B was singled out as the “clear highlight,” with revenue growing 23.6% and the segment margin expanding to 8.6%, supported by ZEOS scale and SCAYLE software revenues. B2C margins, however, were diluted by the ABOUT YOU integration.

Management confirmed full-year 2026 guidance for 12%-17% GMV and revenue growth and adjusted EBIT of €660-740 million.

On the macro backdrop, Zienkowicz noted that while “the European consumer remains cautious and price-sensitive,” no measurable impact from the Middle East conflict has been incurred, though guidance excludes any prolonged conflict impact.

Key watchpoints flagged by mwb Research include cash conversion, ABOUT YOU margin progression, and macro and geopolitical risks.