Corporate insiders know their companies more intimately than anyone else. If they’re buying company stock, it is generally a sign that business performance is strong and that the outlook for the stock is attractive.
In this report, we are going to highlight some interesting insider buying at Zalando SE (ZAL:GR). Zalando operates Europe’s largest online fashion platform. Founded in 2008, it now operates in 23 countries and sells products from over 4,500 brands. The company is listed on Deutsche Börse’s Xetra and has a market capitalization of €23.8 billion at present.
Zalando: Insider Buying
Our insider transaction data shows that on 7 September, Zalando board member – and second-largest shareholder overall – Anders Holch Povlsen bought 51,602 ZAL shares at a price of €96.80 per share. This purchase cost the insider just under €5 million.
This trade is worth highlighting due to the fact that Mr. Povlsen has made a number of well-timed purchases in the recent past. In April, for example, he spent nearly €40 million on stock when it was trading around the €86 to €87 level. Since then, it has risen as high as €106. He also bought a significant amount of Zalando stock in 2019, when it was trading near €33.
It’s worth noting that Mr. Povlsen has a considerable amount of experience in the retail industry. Currently, he is CEO of international clothes retailer chain Bestseller which owns a number of well-known fashion brands such as Jack & Jones, Selected, Vero Moda, and Only. He first invested in Zalando in 2013 when he acquired 10% of the shares in the company.
Strong Growth in Q2
Zalando recently posted a good set of second-quarter results.
For the period, gross merchandise value (GMV) grew 40.0% to €3.8 billion while revenue rose 34% to €2.7 billion with growth driven by continued strong consumer demand for online offerings and increasing partner adoption of platform services. Net income came in at €120.4 million, slightly lower than the figure of €122.6 million posted in Q2 2020 due to investments in customer acquisition and brand marketing.
On the back of these results, the company upgraded its adjusted EBIT guidance for the full year. It now expects to achieve adjusted EBIT in the upper half of the guided range of €400 million to €475 million (versus previous guidance of €350 million to €425 million).
This year, Zalando has further expanded its footprint across Europe, launching its platform in six new markets including Lithuania, Slovakia, Slovenia, and Croatia. Looking ahead, the group is excited about launching a strategic partnership with beauty group Sephora later this year.
In light of these developments, we see the insider buying activity here as a bullish indicator.