Investing.com -- Shares in Zalando fell more than 5% on Tuesday as a sharper-than-expected decline in third-quarter gross margin overshadowed better-than-expected GMV and revenue growth at the German online fashion retailer, which increased price investments in its consumer business.
The German online fashion retailer's GMV rose 7.5% to €4.54 billion from €4.22 billion a year earlier, beating the% consensus compiled by analysts.
Revenue increased 5.1% to €3.18 billion from €3.02 billion, above expectations for 4.4% growth.
Business-to-consumer revenue rose 2.8% to €2.83 billion, while business-to-business revenue surged 27.9% to €354.40 million.
Gross margin fell 90 basis points year-on-year to 38.7%, missing the 39.9% consensus, as Zalando increased targeted price investments in its consumer business. Margin was also weighed down by the faster growth of its business-to-business operations.
Group EBIT increased 10.6% to €106.50 million from €96.30 million a year earlier, in line with expectations. The EBIT margin stood at 3.4%, supported by a 90-basis-point reduction in fulfilment costs.
Zalando reported a net loss of €18 million, compared with net income of €12.50 million a year earlier. Basic loss per share was €0.07, against a consensus forecast for earnings of €0.31 per share.
Jefferies analysts said clearance efforts on sneakers had helped the company control inventories, which amounted to 18.4% of trailing 12-month sales, compared with 21.8% a year earlier.
Zalando reiterated its full-year 2026 guidance, expecting GMV growth in the lower half of its 12% to 17% range, against consensus expectations of 12.2%.
It maintained its full-year EBIT forecast of €680 million to €720 million, compared with analyst expectations of €695 million.
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