By Geoffrey Smith
Investing.com - Germany’s decision to allow certain stores to reopen from next week is the biggest sign yet from Europe’s biggest economy that it is on the road to recovery, but it's storeless fashion retailer Zalando that is the country's biggest gainer on Thursday.
Zalando (DE:ZALG) shares rose 5.5% to their highest since February after the company said that, actually, the first quarter wasn’t going to be as bad as it had warned.
Analyst consensus had coalesced around a loss of 10 million euros before earnings and taxes for the quarter after the company’s vague profit warning in March, but it said after the close on Wednesday that it now expects a profit, albeit of less than 10 million euros. Gross merchandise value and revenue won’t be too far away from analyst expectations for growth of 23% and 15% respectively.
The surprise seems due to customers paying more attention to keeping fit during lockdown. Zalando said its customers had doubled their purchases of sportswear from a year earlier, specifically in the area of running, yoga and fitness wear.
Online retailers have, inevitably, done better than their brick and mortar rivals in the age of Covid-19 lockdowns. Amazon (NASDAQ:AMZN) has marched to all-time highs, while traditional chains, from Nordstrom (NYSE:JWN) to the U.K.’s Debenhams, have languished. With today’s gains, Zalando is down only 5.7% for the year, while U.K.-based boohoo.com (LON:BOOH), another online only name, is down only 7.7%. By contrast, Next (LON:NXT) and H&M (ST:HMb) are down over 30% while Zara owner Inditex (MC:ITX) is down nearly 20%.
The bifurcation has sharpened this week as Zalando, Boohoo and Asos (LON:ASOS) have all risen by between 6% and 10%. Assuming that customers haven’t spent all their reduced pay checks on yoga bottoms, the first reopenings may arrive just in time to save this year’s spring collections from total ruin.
Whether they are enough to encourage purchases of a new Audi is another matter. But, with all of Germany's auto dealerships also allowed to reopen from next week, at least there's hope.
Germany’s big auto names were at the top of the DAX on Thursday morning, with Volkswagen (DE:VOWG_p) preferred stock up 3.4%, Daimler (DE:DAIGn) stock up 2.4% and BMW (MI:BMW) stock up 2.3%. Infineon (DE:IFXGn), which depends in large measure on selling chips to those names, is the biggest gainer, up 3.6%. The DAX pared early gains to be up 0.9% while the STOXX 600 was up 0.7%.