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Zalando tumbles as top investor Kinnevik sells shares

posted onSeptember 17, 2019

Shares in Zalando plunged as much as 10 per cent on Tuesday (Sept. 17) after Swedish investment firm Kinnevik, sold a portion of its shareholding in Europe’s largest online fashion retailer.

Zalando's largest shareholder completed the placement of 13.13 million shares in the Berlin-based company to institutional investors and raised 558 million euros in the transaction.

The placing represented 5.2% of its shareholding in Zalando. The shares were issued at a price of about 42.50 euros per share. Credit Suisse Securities (Europe) Limited and Goldman Sachs International acted as Joint Bookrunners in the transaction.

The Swedish firm now holds 65.3 million shares in Zalando representing 25.8 percent of the German company's issued share capital. 

Kinnevik has committed to sell no further shares from its own portfolio for the next six months.  

Commenting on the divestment, Kinnevik’s CEO, Georgi Ganev stated: 

“Kinnevik is proud to be a partner in Zalando’s journey towards becoming Europe’s leading fashion destination. As a result of its unparalleled success since our first investment in 2010, Zalando has grown into Kinnevik’s largest asset. The decision to divest a small portion of our shareholding – we remain Zalando’s largest shareholder – should be seen in the light of our ambition to maintain our pace of investment to continue evolving our portfolio towards a larger share of private companies.

We have the fullest confidence that Zalando’s platform strategy will allow the company to better serve its customers by leveraging its unique capabilities in technology and logistics, and Zalando fits squarely with our continued intent to be the leading publicly listed growth-focused investor in Europe.”

Zalando share price

Despite the recent slide, Zalando has seen its share price increase by 82% in the year to date, third place in the MDAX. 

The  German online giant which from its launch in 2008 as a small startup grew to become a €10B publicly-listed company in 6 years,  grew its business in the second quarter of 2019. The number of active customers grew by 3.7 million (15.2%) year-over-year to 28.3 million across Zalando’s 17 European markets.  Gross Merchandise Volume (GMV) grew by 23.7% to EUR 2.0 billion; revenues increased by 20.1% to EUR 1.6 billion. In the same period, Zalando achieved an adjusted EBIT of EUR 101.7 million or a margin of 6.4%. 

Following a strong first half of 2019, Zalando raised its profitability outlook to the upper half of the adjusted EBIT range of EUR 175-225 million (previously: in the EUR 175-225 million range). The company confirmed its full-year guidance of GMV growth of 20% to 25% and now expects revenue growth around the low end (previously: at the low end) of this range. It also confirmed its expected capital expenditure of around EUR 300 million. 

Zalando, which employs around 14,000 people from more than 130 countries, will report the results for the third quarter of 2019 on October 31, 2019.