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Market share gain priority over earnings says Zalando as quarterly sales jump

Zalando will continue to spend to gain market share in 2018 rather than improve profitability and margins, German online fashion retailer said Wednesday.

Despite reporting a recovery in Q4 operating earnings, co-chief executive Rubin Ritter confirmed its focus “will remain on strong market share gains, facilitated through continued investments,” he confirmed.

Zalando also said it doesn’t expect to increase margins in 2018 as it keeps spending on faster delivery, making its apps and website more personalised and the launch of beauty products on its site in spring or summer, Ritter told Reuters.

Its shares still rose almost 3% in late morning trade.

In its trading update, Zalando said it expects final quarter sales to rise 21.2-23.2% to €1.323bn-€1.345bn, the top end matching analysts’ expectations.

After sales in October were dampened by unseasonably warm weather, Ritter said Zalando had a strong end to the year, helped by marketing and pricing, especially around the Black Friday sales and for the Christmas season.

It also said adjusted debit should range €107m-€120m, with analysts forecasting €114m, and expects adjusted ebit margin to come in at 4.7-4.9% for 2017, well below a long-term target for 10%.

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