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Zalando - Update 09/01/2026 - ISIN DE000ZAL1111 · Warren's Watchlist - english

• 0:07
  Speaker 1:
• 0:09
  Speaker 0: I wrote down what Zalando says about.
• 0:37
  Speaker 0: So what's wrong with the numbers?
• 0:49
  Speaker 1: For
• 1:01
  Speaker 0: those hearing us for I'm talking with Warren Wise, an AI technology that analyzes and rates equity stories like a value investor.
• 1:10
  Speaker 1: Exactly!
• 1:13
  Speaker 1: And
• 1:29
  Speaker 0: I'm Corey Capitol, also AI the voice of The Private Investor.
• 1:34
  Speaker 0: Almost everyone orders from Zolando and many hold the stock too.
• 1:38
  Speaker 0: Today i want Warren Wise to tell me why Zolondo reported a record year... ...and he still only put it on the watch list.
• 1:57
  Speaker 1: There's more money in the cash box than Zalando has in debt.
• 2:00
  Speaker 1: It earns the interest on that debt, more then five times over from ongoing operations and thats after buying About You which cost a good billion euros.
• 2:09
  Speaker 0: So A balance sheet without styling.
• 2:11
  Speaker 1: The ownership structure is positive too.
• 2:14
  Speaker 1: Almost nine of every ten shares are free float.
• 2:17
  Speaker 1: No one can out vote you as small shareholder And the supervisory board that oversees management Is almost entirely independent.
• 2:25
  Speaker 0: So where does the styling begin, Warren?
• 2:27
  Speaker 1: Revenue rose about seventeen percent in twenty-twenty five.
• 2:31
  Speaker 1: But that turns out to be a jacket with broad shoulder pads because the purchase of About You is baked in.
• 2:37
  Speaker 1: Guess how much Zalando grew under its own power – That Is Without The Acquisition.
• 2:42
  Speaker 0: Um... twelve per cent?
• 2:44
  Speaker 1: Just under seven…that's how it stands in the annual report!
• 2:48
  Speaker 1: The other ten percent is About You's revenue.
• 2:51
  Speaker 1: It's counted towards Zolando since the acquisition in July, and that is why growth looks more than twice as large.
• 2:57
  Speaker 0: But an acquisition has growth too!
• 2:59
  Speaker 0: Zolondo had money put it to work.
• 3:02
  Speaker 0: now their revenue was there.
• 3:03
  Speaker 0: What's padding about this?
• 3:05
  Speaker 1: ZOLANDO has set itself a growth of eight-to-thirteen percent for years through twenty-twenty-eight.
• 3:11
  Speaker 1: The whole plan is built on that.
• 3:14
  Speaker 1: As reported with the acquisition ZOLANDO is even above at about seventeen percent, but under its own power it's only just under seven.
• 3:24
  Speaker 1: So the pace the plan needs Zalando hasn't yet shown.
• 3:28
  Speaker 1: under his own power The growth is for the larger part bought
• 3:31
  Speaker 0: not earned Fine.
• 3:33
  Speaker 0: so the organic growth isn't where the plan needed.
• 3:36
  Speaker 0: But what actually reached to bottom line?
• 3:38
  Speaker 0: The profit?
• 3:39
  Speaker 1: Less than a year before Revenue rose around seventeen percent and profit after tax fell good fifteen.
• 3:46
  Speaker 1: That's not unusual.
• 3:47
  Speaker 1: in the year you take over a competitor.
• 3:49
  Speaker 1: The acquisition costs money, the integration costs money and the newcomer brings revenue first... ...and profit later.
• 3:56
  Speaker 1: But it also means none of that record revenue has reached the shareholder.
• 4:00
  Speaker 1: yet Whether this growth earns money is so far unproven.
• 4:05
  Speaker 0: And this year?
• 4:06
  Speaker 0: In August there were new figures again.
• 4:08
  Speaker 0: Is Zalando at least growing under its own power again
• 4:11
  Speaker 1: Even slower!
• 4:15
  Speaker 1: even further from the pace the plan needs, and Zalando cut its guidance for the full year.
• 4:21
  Speaker 1: On profit it looks no
• 4:22
  Speaker 1: better.".
• 4:23
  Speaker 0: So still a jacket with very broad shoulder pads?
• 4:26
  Speaker 1: Exactly!
• 4:27
  Speaker 0: Fine less reach to bottom line.
• 4:30
  Speaker 0: but Zalondo itself talks about record-profit.
• 4:33
  Speaker 0: how does that fit together?
• 4:34
  Speaker 0: Because
• 4:34
  Speaker 1: there are two profit figures.
• 4:36
  Speaker 1: One is in the income statement, an operating result of just under four hundred million euros.
• 4:42
  Speaker 1: The other is in same annual report and it's one Zalando puts front-and-center.
• 4:47
  Speaker 1: The adjusted results just under six hundred million.
• 4:50
  Speaker 1: The record is second one
• 4:51
  Speaker 0: What exactly was adjusted out Warren?
• 4:54
  Speaker 1: Costs Corey that management says don't belong to normal business.
• 4:58
  Speaker 1: Acquisition costs Logistics overhaul Share based compensation.
• 5:03
  Speaker 1: A company is allowed to do that, and almost all of them do.
• 5:06
  Speaker 1: The only question is how much gets adjusted out?
• 5:09
  Speaker 1: A few cents on the euro is normal!
• 5:11
  Speaker 1: Beyond a certain point... ...the adjusted figure is no longer the profit without disruptions but a different profit.
• 5:18
  Speaker 1: Guess for every Euro of unadjusted profit How many cents of adjustment get added on top at
• 5:24
  Speaker 1: Zalando?".
• 5:25
  Speaker 0: Well..that would have to be around fifty then wouldn't it?
• 5:27
  Speaker 1: Right.
• 5:28
  Speaker 1: Fifty-three to be exact.
• 5:30
  Speaker 1: The year before it was thirty.
• 5:32
  Speaker 0: Hold On But acquisition costs really are one-off.
• 5:35
  Speaker 0: Zalando bought about you, that cost money and next year it's gone!
• 5:39
  Speaker 0: Why shouldn't you be allowed to adjust that out?
• 5:41
  Speaker 0: You're
• 5:42
  Speaker 1: allowed too.
• 5:43
  Speaker 1: but the single biggest item isn't the acquisition.
• 5:46
  Speaker 1: It is share based compensation shares & options for employees in the board.
• 5:51
  Speaker 1: a good ninety million euros To me, that's part of the salary and salary is normal business.
• 6:02
  Speaker 0: And it only ever adjusted in one direction?
• 6:05
  Speaker 0: Surely there sometimes a profit has nothing to do with this business!
• 6:09
  Speaker 1: That would be the test.
• 6:10
  Speaker 1: Adjusting means stripping out disruptions...in both directions.
• 6:15
  Speaker 1: A one-off gain proceeds from an asset sale ...a released provision will all push the adjusted profit down.
• 6:22
  Speaker 1: At Zalando There isn't single one.
• 6:24
  Speaker 1: All four items are costs.
• 6:27
  Speaker 1: each makes the adjusted figure bigger.
• 6:29
  Speaker 0: And still, a record is
• 6:49
  Speaker 1: Exactly, and in the first half of twenty-twenty six.
• 6:52
  Speaker 1: The gap grew even wider.
• 6:54
  Speaker 1: unadjusted a good thirty million euros as result adjusted to go two hundred seventy
• 7:00
  Speaker 0: That's about nine times.
• 7:02
  Speaker 0: then
• 7:02
  Speaker 1: for every unadjusted euro About seven get added on top.
• 7:07
  Speaker 1: A large part of that is the closure over logistic center really paid For but not in the figure up front.
• 7:13
  Speaker 0: Then there still the cash box into which a billion flow.
• 7:17
  Speaker 0: money is money?
• 7:17
  Speaker 0: That's a positive isn't it?
• 7:19
  Speaker 1: Money is money.
• 7:20
  Speaker 1: The only question is whose money it is?
• 7:23
  Speaker 0: A quick word on our own behalf, since it fits right now... What you're hearing here is the short version!
• 7:46
  Speaker 0: and to the question of whose money is
• 8:11
  Speaker 1: in.
• 8:18
  Speaker 0: That's bargaining power, not styling.
• 8:20
  Speaker 1: If it were only that you'd be right.
• 8:23
  Speaker 1: but at Zolando a bank sits in between.
• 8:26
  Speaker 1: It pays the suppliers immediately and Zolanto pays the bank later.
• 8:30
  Speaker 1: A good nine hundred million euros run through this.
• 8:33
  Speaker 1: Its legal its'in-the report But it is alone.
• 8:37
  Speaker 1: The full cash box Is largely borrowed.
• 8:40
  Speaker 0: So Borrowed Like an evening gown.
• 8:42
  Speaker 0: The Evening was lovely Tomorrow goes back And cleaning bill comes on top.
• 8:46
  Speaker 1: That comparison is apt.
• 8:48
  Speaker 1: And what's left when you subtract the investments and purchase of about-you from that inflow, not even quite a black zero?
• 8:55
  Speaker 1: The billion up front was for most part supplyers'
• 8:58
  Speaker 1: money.".
• 8:59
  Speaker 0: That's wild!
• 9:00
  Speaker 0: The success story fizzles out.
• 9:02
  Speaker 1: It doesn't fizzle but August showed whats left in it.
• 9:06
  Speaker 1: In the first half of twenty twenty six Zalando paid part those invoices and immediately the inflow from business collapsed by three-quarters compared with year before.
• 9:17
  Speaker 1: The evening gown went back,
• 9:19
  Speaker 0: And the shine was it!
• 9:20
  Speaker 0: That leaves none of these figures standing.
• 9:23
  Speaker 1: Everything stands.
• 9:24
  Speaker 1: each of them is true.
• 9:27
  Speaker 1: only together they tell a different year than one.
• 9:29
  Speaker 1: Zalando tells
• 9:31
  Speaker 0: What I take for this?
• 9:32
  Speaker 0: Even with record announcement you have to look closely.
• 9:35
  Speaker 0: everything's true and yet... It was a different Year.
• 9:41
  Speaker 1: Adjusting, paying later growing with about you.
• 9:45
  Speaker 1: That's legal styling.
• 9:46
  Speaker 1: but in one case it stopped being Styling.
• 9:49
  Speaker 1: there a disclosure was missing.
• 9:51
  Speaker 1: every garment has A label that says where It comes from.
• 9:54
  Speaker 1: In the annual report?
• 9:56
  Speaker 1: That's The note on related party transactions.
• 9:59
  Speaker 1: companies controlled by members of its own boards.
• 10:02
  Speaker 1: in twenty-twenty five Zalando bought goods worth a good three hundred fifty million euros From such Companies.
• 10:09
  Speaker 1: A third more than the year before, growing twice as fast is revenue.
• 10:13
  Speaker 0: Hold on!
• 10:13
  Speaker 0: The three hundred fifty million were in the report.
• 10:16
  Speaker 0: so what was missing?
• 10:17
  Speaker 1: They were in there cleanly disclosed.
• 10:19
  Speaker 1: I'd flagged them.
• 10:20
  Speaker 1: a review point not an accusation.
• 10:23
  Speaker 1: What was missing?
• 10:24
  Speaker 1: one line over and In July financial regulator found it Related party involved about you acquisition.
• 10:32
  Speaker 1: Zalando had bought about you shares worth a good two hundred fifty million euros from a company controlled by a supervisory board member.
• 10:39
  Speaker 1: That very origin disclosure was not in the
• 10:42
  Speaker 1: notes.".
• 10:43
  Speaker 0: So exactly the passage of the report, you'd already flagged?
• 10:46
  Speaker 0: just one seam further.
• 10:48
  Speaker 1: Exactly, and that's the point where styling stops.
• 10:52
  Speaker 1: if you buy shares from a company owned by one of your own supervisory board members You have to disclose it in the financial statements not because The price was wrong but so anyone can check whether It Was Zalando didn't do That?
• 11:05
  Speaker 1: That's why the regulator objected To the accounts.
• 11:08
  Speaker 0: And is the label attached By now?
• 11:10
  Speaker 0: the half-year report has come out since then.
• 11:13
  Speaker 0: yes
• 11:14
  Speaker 1: In early August, Zalando added the disclosure in The Half Year Report.
• 11:18
  Speaker 1: It now says that share purchase from the supervisory board members' company on the same terms as for all other shareholders.
• 11:25
  Speaker 1: On the twenty-first of July, the financial regulator had formally determined this disclosure was missing from the financial statements.
• 11:33
  Speaker 1: Two weeks later it is in notes of the half year report.
• 11:37
  Speaker 0: That's how fast disclosure can go when has to
• 11:40
  Speaker 1: When it has too.
• 11:41
  Speaker 1: And the same half-year report that adds the label is one that confirms my finding on The Cash.
• 11:47
  Speaker 1: That shows a loss in the bottom line, and that's the punchline of this summer!
• 11:51
  Speaker 1: The report that closes the gap also shows what was behind the styling.
• 11:56
  Speaker 1: Styling doesn't change whats there – it changes what you see.
• 12:00
  Speaker 0: Then answer to question we started with….
• 12:02
  Speaker 0: What did Zalando really achieve in twenty twenty five?
• 12:06
  Speaker 1: Less than It Looks Just under seven percent organic growth.
• 12:09
  Speaker 1: That's not yet the pace the company's own plan needs.
• 12:12
  Speaker 1: A profit that fell before adjustments, and a cash box that didn't fill from its own business –that is the ordinary year I spoke of at
• 12:20
  Speaker 1: start.".
• 12:21
  Speaker 0: And now…the other half?
• 12:22
  Speaker 0: What speaks for Zalondo?
• 12:24
  Speaker 0: even without styling?
• 12:25
  Speaker 1: Quite a bit...and i mean it seriously!
• 12:28
  Speaker 1: The business with other retailers logistics & software as service turned profitable in twenty-twenty five.
• 12:35
  Speaker 1: The loyalty program has over sixteen million members, and they order more than forty percent of the goods volume.
• 12:41
  Speaker 1: Guidance was met at the upper end... ...and Zalando discloses its organic growth openly — many
• 12:48
  Speaker 1: don't.".
• 12:48
  Speaker 0: That's a real moat!
• 12:50
  Speaker 1: "...the building blocks?
• 12:51
  Speaker 1: Yes...".
• 12:51
  Speaker 1: "...a real moate shows itself in a company being able to command better prices then others,".
• 12:56
  Speaker 1: "...and you see that in profit… At three-percent margin?
• 12:59
  Speaker 1: I don't yet
• 13:01
  Speaker 0: see it…".
• 13:01
  Speaker 0: And still only the watch list – why not
• 13:03
  Speaker 0: better?!
• 13:04
  Speaker 1: Because the numbers tell two different stories.
• 13:06
  Speaker 1: The balance sheet is strong, the business is real but revenue grows and profit falls... ...the cash box is full but with the supplier's money….
• 13:16
  Speaker 1: …and more than half of the profits are adjusted out until I know which one of these two stories is true—I watch!
• 13:22
  Speaker 1: And don't
• 13:23
  Speaker 1: invest.".
• 13:24
  Speaker 0: So it's not the substance you're missing?
• 13:26
  Speaker 0: It's the clarity.
• 13:27
  Speaker 1: "...And only Zalando can deliver
• 13:28
  Speaker 1: that!".
• 13:29
  Speaker 1: so addressed to the board You've been steering toward an adjusted margin of just under five percent for two years, and your target for twenty-twenty eight.
• 13:37
  Speaker 1: starts at six.
• 13:39
  Speaker 1: Show a visible step in Twenty-Twenty Six.
• 13:41
  Speaker 1: Disclose what about you actually contributes?
• 13:45
  Speaker 1: You promised one hundred million a year for it!
• 13:47
  Speaker 1: And show the cash box without the supplier's money so one can see what business itself
• 13:53
  Speaker 1: earns.".
• 13:56
  Speaker 0: Then, twenty-twenty five
• 13:59
  Speaker 1: wasn't a transition year but the new normal.
• 14:02
  Speaker 1: Not bad just not what The Outfit promises.
• 14:05
  Speaker 0: Watchlist is that a sell signal?
• 14:07
  Speaker 1: No I give no buy hold or sell recommendation.
• 14:10
  Speaker 1: watch list means i see A solid company whose numbers look better than they are and I wait for the Year in which both line up.
• 14:17
  Speaker 1: the next answer to That comes In the autumn with the third quarter figures.
• 14:21
  Speaker 1: And the first thing I'll check Is who's money is in the cash
• 14:24
  Speaker 0: box and What do I take from this for the next annual report I open.
• 14:44
  Speaker 1: The
• 14:56
  Speaker 0: notes are not fine print.
• 14:58
  Speaker 0: They're the label, and that's where I'll look first in the next annual report.
• 15:02
  Speaker 1: Clothes make the man And annual reports Make the numbers.
• 15:06
  Speaker 1: That's not reprehensible—that's their purpose.
• 15:09
  Speaker 1: A company shows its best side —and it is allowed
• 15:11
  Speaker 1: to.".
• 15:13
  Speaker 0: I just need to know what substance is underneath.
• 15:53
  Speaker 1: while the jacket grew broader.
• 15:55
  Speaker 1: Styling doesn't change what's there, it changes.
• 16:13
  Speaker 1: The
• 16:21
  Speaker 2: content of this episode is for general information purposes only.
• 16:26
  Speaker 2: It does not constitute investment advice or an invitation to buy, hold and sell any financial instrument.
• 16:33
  Speaker 2: All assessments are based on a model-driven AI supported analytical approach.
• 16:40
  Speaker 2: Warren Wise is fictional synthetic character neither real person nor their estate Nor company connected with such persons.
• 16:49
  Speaker 2: Any reference Benjamin Graham Warren Buffett or Charlie Munger is purely descriptive of the investment philosophies attributed to them.
• 16:59
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• 17:06
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• 17:09
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