Both Zalando and one of its initial shareholders, Rocket Internet, are poised to announce their entry on the Frankfurt stock exchange. Zalando began to offer new shares to institutional investors yesterday, coinciding with the start of a roadshow for potential investors across Europe and the U.S.. The company is set to go public on or around Oct. 1, Some of the newly issued shares would go to the company's employees at special conditions.
Zalando's initial public offering (IPO) will start off with the issue of new shares representing up to 11.3 percent of the capital at a price that could value the company at up to €5.7 billion. The initial share price, which is due to be set on Sept. 29, could vary between €18 and €22.50 a share, leading to net proceeds of up to €633 million from the IPO. They would be invested mainly in the company's further expansion, including the penetration of new markets, the acquisition of technology or fashion stores, and an enlarged product offer.
Zalando, which is currently represented in 15 European countries, generated for the first time a positive operating margin (Ebit) in the first half of this year at 1.2 percent of sales, against a negative margin of 8.9 percent in the year-ago period, although the first part of the year is generally weaker than the second half. In Germany, Austria and Switzerland, the Ebit margin reached 4.6 percent.
Zalando's net sales increased by 29.5 percent to €1,047 million in the first six months of this year, with growth of 21.2 percent to €594 million in the German-speaking countries. Private label items represented 16 percent of the turnover. Mobile applications were used by 41 percent of the 323 million visitors at its various national web stores in the course of the second quarter. The number of active customers rose to 13.7 million in the quarter from 11.6 million a year ago.
A recent reduction in the company's previously high marketing expenses probably contributed to the latest good figures. The management said that Zalando has improved its cost structure in several ways, including the introduction of automated logistic processes. The ramp-up of its new distribution center in Mönchengladbach is proceeding according to plan, and the company will try to introduce additional efficiencies.
Zalando was founded by Robert Gentz and David Schneider in 2008 with the help of Rocket Internet. The Swedish Kinnevik investment fund is currently the largest shareholder in Zalando with 36 percent of the equity. Other major shareholders are Global Founders (17%), Anders Holch Povlsen (10%), DST Europe (8%) and Holtzbrinck Ventures (8%). Global Founders is the investment vehicle of the Samwer brothers, which controls Rocket Internet (see the next article).