Will H&M Buy Zalando SE To Make Up For The Short Board?

According to the world clothing shoes and hats net, Europe's largest online

Retailer

(ZALG.DE) after achieving its expected revenue growth in 2017, Mr said that it would continue to invest in order to increase market share this year, but it would be difficult to consider the improvement of profitability at the same time.

Due to the remarkable recovery of the fourth quarter profit level, Zalando SE (ZALG.DE) has gained a record high of 4.6% to 46.65 euros today, with a market capitalization of about 11 billion euros.

Zalando SE said that the income of the holiday season as of the end of December will be between 13.23-13.45 billion euros and 21.2%-23.2% 1 billion 91 million 600 thousand over the same period in 2016.

After adjustment, EBIT will rise to 95 million 600 thousand billion euros in the same period of the previous year to 1.07-1.20 billion euros, or 11.9%-25.5%.

The expectations for income and adjusted EBIT are 1 billion 345 million euros and 114 million euros respectively.

Adjusted EBIT profit margin is expected to be 8.1%-8.9%, a substantial improvement over the three quarter, compared with 8.8% in the previous year.

The annual income will increase by 23.7% to 4 billion 500 million euros over the 3 billion 639 million euros in fiscal year 2016, adjusted by EBIT, which is expected to grow between 2.09-2.22 billion and -3.3% to 2.6%, and the profit margin will drop from 5.9% to 4.7%-4.9%, less than the 5.0%-6.0% of the medium-term target. The group has issued a profit warning in November.

And the ASOS PLC (ASC.L), which is expected to increase annual revenue growth to 25%-30% in October, expects EBIT profit margin to remain unchanged at 4%.

Zalando SE co chief executive Rubin Ritter Ritter said in the earnings report that although the weather was warmer in October, the group could still make up for black Friday and Christmas, ending with strong performance, and achieving profit growth throughout the year. The focus of 2018 will still be to gain market share through investment so as to maintain the current growth track.

In 2017, the group put forward a long-term target of 5% of the European apparel market.

As Amazon.com Inc. (NASDAQ:AMZN), the world's largest online retailer, continues to expand its European apparel market, and the growth of competitors such as ASOS PLC and Boohoo.com PLC (BOO.L) continues to lead, Zalando SE has increased its investment in logistics and technology in 2017.

Starting this spring, the group will enter the beauty market and gradually test the sale of beauty products from Germany, which in turn will increase the cost of supply chain, logistics and marketing.

Rubin Ritter reiterated today that it did not expect profit margins to improve in the current 2018 fiscal year.

Sherri Malek, an analyst at RBC Capital Markets LLC plus Huang capital market, also said it did not expect Zalando SE's profit margin to increase significantly in the medium term.

At the end of the month, investors pulled the highest price of Zalando SE (ZALG.DE) to 46.86 euros, which has risen 26.6% in the past year.

Last week, the Swedish Business Week "Aff RSV RSV rlden" proposed that the second largest apparel retailer, Hennes & Mauritz AB (HMb.ST), acquire Zalando SE to enhance the current lagging e-commerce business and boost sales that have already started to reverse.

Due to sluggish demand and excessive expansion of flagship brand H&M, quarterly sales of Hennes & Mauritz AB have dropped unexpectedly, the first time since 1998, and its profits have also been oppressed by problems such as rising investment and exchange rate floating, leading to higher procurement costs in recent years.

In the past year, Hennes & Mauritz AB (HMb.ST) has fallen by 37%, and its market value is currently around 265 billion kronor, or 27 billion euros.

It is reported that the group is developing an electronic commerce code named P12, which is expected to launch its first multi brand e-commerce platform in April this year, and now it has introduced about 60 brands.

The editor of Aff RSV RSV rlden believes that Hennes Mauritz & AB should undertake mergers and acquisitions at the same time as investing in e-commerce projects, or at least cooperate with Zalando SE.

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