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ZALANDO SE (ZLNDY) Q1 2020 Earnings Call Transcript

By Motley Fool Transcribing – May 10, 2020 at 6:30AM

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ZLNDY earnings call for the period ending March 31, 2020.

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Q1 2020 Earnings Call
May 07, 2020, 12:30 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Dear ladies and gentlemen, welcome to the conference call of Zalando SE regarding the publication of the Q1 results 2020. At our customer's request, this conference will be recorded. [Operator instructions] I now hand you over to Patrick Kofler, who will lead you through this conference. Please go ahead, sir.

Patrick Kofler -- Head, Investor Relations

Good morning, everybody, and welcome in these extraordinary times to our Q1 2020 earnings call. With me today are our co-CEO, Rubin Ritter, who will give you an update on how we are executing our strategy in times of the corona pandemic; and our CFO, David Schröder, who will walk you through the financials. As always, this call is being recorded and webcasted live on our investor relations website, and a replay of the call will be available later today. Rubin, I will now hand over to you.

Please go ahead.

Rubin Ritter -- Chief Executive Officer

Yes. Thank you, Patrick, and welcome also from my side. Thank you for dialing in. We have quite a bit to talk about, so maybe I can start the call by summarizing our key messages upfront.

You will not be surprised that the last weeks have been dominated by our COVID-19 response in terms of ensuring employee safety, our own financial health and then also a more strategic response, so this has been very much in our focus. As we already have communicated, the crisis has impacted our Q1 financial performance, and we'll talk about that more on this call. Still, we saw strong GMV growth of about 14% but also a negative adjusted EBIT of minus EUR 99 million. However, and I think this is the key update of this call, we see clear signs that our starting point strategy is even more relevant than before, and we see strong traction.

For example, in our active customer growth, which was 17% in the first quarter and also accelerated platform transition with the Partner Program gaining share even faster than before. And we see even more promising signs in the month of April, and we'll go into more detail during this call. On this basis, we are confident to give an optimistic outlook for the full year and also beyond, guiding now to double-digit GMV growth and clear profitability for the full year, and we continue to aim for our ambitious targets for 2023, '24. Let me maybe start into the first section, where I want to talk about how we responded to COVID-19 and how we continue to execute and even accelerate the strategy that we have set for ourselves.

Maybe we can just take a minute to go back in time to 2008 when Zalando was founded right into the financial crisis. And since that time, it is ingrained into our DNA as a team and as a company that every crisis also bears opportunity and that the most important opportunity is to grow stronger as a team and to gain clarity on our priorities. But to achieve this, of course, it requires also decisive and fast action. So in that spirit, I want to become clear that also Zalando and the entire fashion industry is impacted by COVID-19, and that we will need to find new answers to new questions.

We shifted gears and we tried to create a lot of clarity and focus on our organization by working on three key priorities: first of all, keeping our employees safe; secondly, to defend our financial success; and thirdly, to find the right strategic response and to become part of the solution for the industry. Today, roughly eight weeks later, I think we can say that our response has been effective and that we have reverted back to our normal ways of operating. Of course, corona still is at the very top of our agenda, and we are ready to go back into crisis mode whenever that might be necessary. But for now, we are, again, operating in our regular ways and have found our new normal for now.

Now I would like to go through the priorities that I just outlined and talk about how we worked on those over the last weeks. To start, I would really like to highlight that we need to keep in mind that also many employees were impacted on a personal level, so we had some employees that felt sick themselves. We have many employees that are international and that are far away from their families, who, in some cases, are living in highly impacted areas. And we also have employees that have lost loved members of their family.

So in this context, it was really clear to us that our first priority needs to be to ensure the safety of our employees. So very early on, we made sure that all colleagues that can work from home actually go into home office, and they still continue to be in home office. That is a contribution we can make to the social distancing efforts in our countries but also across the world. And of course, we were very busy to help employees that are now juggling several responsibilities.

I think several of us have learned that it is a big challenge to be a working parent when kids are -- and schools are closed. Actually, we are quite happy, though, that from the numbers that we see, team efficiency has not suffered in any major way. We actually have seen employer NPS going up 10 points over the last weeks, and we take that as very positive feedback on our response. Now for everyone that cannot work from home, most importantly, our logistics sites, we were focused on creating a safe workplace.

So we try to go far beyond safety standards published by the local governments. For example, we ask everyone that is part of a risk group, so older than 60 years as an example, to stay home at full pay. We started to measure temperature at warehouse entrance. We provided and made mandatory to wear facial masks long before that was a mandatory requirement in Germany, and we also have started to build the capability to test employees, which should allow us to test and isolate and react even better.

Of course, business continuity was also a major focus. We saw traffic jams at European borders. We see higher absence rates in our warehouses. We see carrier networks being stressed, and so of course, there was the need to manage our supply chain very actively throughout the last weeks.

Now our second priority was really to safeguard the financial success of our company. When Italy started to go into lockdown, we saw the first negative impact on our revenues. And as more and more countries went into lockdown, we saw the revenues of the company overall decreasing compared to last year by about 8% over the weeks following March 9, the biggest impact we saw in the Southern European countries. And as we are used to typically growing our revenues, this was, of course, a new picture to us and something that we needed to react to.

So during that time, we developed a number of demand scenarios for the year and really stress tested our financial health against those scenarios. We, on that basis, initiated a cost-savings program. And we drew our revolving credit facility to make sure that we are also prepared in the most negative scenarios and that we can also invest through cycle. And we, of course, adjusted our trading routines, so we made the mid-season sale earlier.

We adjusted our marketing steering and our messaging to our customers. Now luckily, throughout April, we have gained momentum much faster than we had anticipated. So we had modeled our recovery based on data that we have seen from China, and we are very happy to see that our recovery has come back much faster than we originally had anticipated. Now our third priority was, really, to find a strategic response to the situation, and this is something that started, really, one week into the crisis.

So very early on, we tried to make sure we gain a strategic view on what is happening, and very quickly, we realized that even though our business is impacted, others are impacted significantly more. Many brands reached out to us because they are sitting on their stock. Many smaller brands struggled financially quite significantly. Obviously, we saw brick-and-mortar stores closing, and the idea came up that with our capabilities of bringing these brands and these stores to the digital world, we can be part of the solution.

Now what we really like about those ideas is that essentially, everything we can do to help the ecosystem are also building blocks of our starting point strategy, so we do not need to change direction any way. But actually, our strategy becomes even more relevant in times of corona, and so we feel that our strategic priorities are very much aligned with the needs of the ecosystem. So as a result of that, we doubled down on those opportunities. And I would like to now go through three examples how we see signs in April that we are really able to accelerate on our strategy.

So the first example I would like to talk about is customer behavior. So in April, we see early signs that COVID-19 is triggering an accelerated channel shift toward online. So as customers are looking for a safe way to shop, we see new customer groups discovering e-commerce, and as a result, we see growing new customer numbers, which obviously plays into our strategy and our market share ambition. In that context, we are adapting our communication, so we are shifting a lot toward social.

So even more budgets and even more attention go into social because that's where our customers are., and we are adjusting our messaging accordingly. So to give you one example, we launched the Together I Am Strong campaign, which was the first campaign ever that we produced remotely. And it's a campaign that is designed with social in mind, so it's not designed for TV but designed for social. And the topic it covers is really the theme of sport at home, which is very much top of mind for our customers as we also see the sports category, especially for yoga wear and running clothes, growing quite substantially.

As a result, we see that this campaign is showing all-time highs in very important engagement KPIs, and we also see a true acceleration in our new customer acquisition. So this April, we gained 40% more new customers than in the April of last year, which makes it our best April ever in terms of customer acquisition. Interestingly, we see the fastest growth with young customers, so below 25 years of age. We see all customer groups growing, but the young customer group growing the fastest.

And we also see that the shift in customer behavior is really impacting categories. So we see kids growing really strongly. Sports, beauty has tripled year over year as customers are looking to bring the spa that is closed to their home, and we're also seeing increased demand for more sustainable products. We also see our channels being impacted.

So the app is growing even stronger, and we have more than 50% of GMV coming through the app in the first quarter. The second example I would like to talk about is the Partner Program and the platform transition. So it's clear to all of us that brands are requiring additional sources of demand to make up for the losses they have in other channels. And that gives us an opportunity to, again, promote the advantages of the Partner Program and the supporting services and, as a result, drive the platform transition, which is one of the key building blocks of our starting point strategy.

So we make quite an appealing offer to brands in these times. So we offer faster integration. We offer earlier payout of the revenues to support their cash cycle. We have a number of campaigns where we are matching ZMS investments by the brands.

We have increased the visibility of Partner Program in the shop, and we will have a dedicated partner sales events in the coming days. As a result, we see a high number of new sign ups, so more than 50 partners that joined over the last three weeks. And we also see significantly higher activity of existing partners. As a result, the Partner Program is accelerating quite substantially.

So compared to April, Partner Program volumes have doubled, and partners have shipped 8 million items in the month of April. We also see the supporting services growing quickly. So for example, that ZFS is in high demand as many brands are struggling with their supply chain, and ZFS was growing about 150% in items shipped year over year. In April, this also had a big impact on the Partner Program share.

So just to give you two data points, we had a Partner Program share of 20% in April. And actually, for Germany, we already saw shares of beyond 40% for individual weeks. And you might remember that 40% actually is the goal that we have set for 2023, 2024, and so this is really a new proof point that we take as a great encouragement that also our long-term goals really are achievable. I would like to point out though that this is a snapshot, so we don't necessarily expect these higher numbers for the full quarter, but it is really encouraging to see how quickly the Partner Program is growing.

So I think we have some trouble showing the right slide at the right time, but I hope you still can follow what I'm saying. I'm now coming to the third example, which is around connected retail, and which is about how we can help bricks-and-mortar stores, which are obviously impacted the most. So in lockdown, their revenues go to zero. And also after the lockdown, they will continue to be impacted negatively, so our connected retail program offers these stores the opportunity to uphold at least part of their business by connecting their inventory into our platform.

And this, obviously, also plays into our starting point strategy because it allows us to build an even more interesting inventory for our customers, and it also adds a very interesting local element to our customer proposition, especially when it comes to fast and local delivery. So to those stores, we're offering zero commission for the month of April and May. We offer weekly payout of revenues to support their cash management. We offer accelerated and fast-track integration, and we have given to these stores a very high degree of visibility on site.

So if you have been in our app or our web shops recently, you might have seen the Together, We Can Support the Store banner, which takes customers' right into a section where we offer inventory from local retailers. As a result, the volumes really have gone through the roof in the coming weeks. So compared to calendar week 13, which is the week before we started this push, volumes have risen -- grown by a factor of five just within a few weeks. Over the last weeks, partners have been able to ship about 350,000 items.

And we get great feedback from stores. Some even told us that with this program, they're now actually making more revenues and more turnover than before the shutdown. One interesting data point is that actually, in Germany, we saw this making up to 5% of GMV on some days. On this basis, we have also started the more international rollout.

Because the program for now has been very focused on Germany and the Netherlands, but we are now also launching Sweden, Poland and Spain. So maybe to summarize the section, really want to get across the point that this crisis could be an opportunity for us to demonstrate resilience and to also show that we have, on the one hand, the right assets. So in terms of our deep customer relationships and the reach to 32 million active customers across Europe, our strong brand partnerships, our European logistics network, which gives us operational resilience, our strong cash balance, which allows us to invest through cycle. And all of these assets come in combination with having the right strategy, so to build the starting point for fashion and digitize the fashion industry is heavily aligned with the industry needs in these days.

So this combination makes us really confident that we can grow even stronger throughout this crisis, and it makes us also confident to finish this year with very strong growth and profitability, and most importantly, to really remain on track to our targets that we have set for 2023, 2024. And with this, I would like to hand over to David to take us through the financials.

David Schroder -- Chief Financial Officer

Thank you, Rubin, for providing this update on our COVID response and also on the progress we've achieved with regards to our starting point strategy. Let me now turn to our Q1 financials and start with a more detailed look at our top-line growth. Despite the strong headwinds, we recorded a double-digit GMV growth of 13.9% year over year and almost EUR 2 billion in GMV in the first three months of the year. I would like to emphasize, in particular, that we saw a strong start into the year until the beginning of March, with the healthy demand across all markets, leading to GMV growth within our 20% to 25% target growth corridor for January and February.

However, following government-imposed lockdown measures, starting March 9, we saw GMV decline on average by 8% year over year until quarter-end, as Rubin just explained. Throughout the whole quarter, Partner Program continued on its strong trajectory, growing close to 60% year over year in terms of GMV. The strong Partner Program performance also explains, to a large degree, the gap of around 3.3 percentage points between GMV and revenue growth. Our teams have been able to adjust our commercial steering very quickly in response to the COVID-19 demand shock in March and resulting changes in customer behavior.

For example, we reduced our marketing investments and pulled forward our usual mid-season sale by a few days. As a result, our sales performance started to improve again toward the end of the quarter, and we were able to return to positive year-over-year GMV growth in April. The fashion store performance in Q1 started according to plan before suffering from lower demand as a result of the COVID pandemic but maintained double-digit GMV growth overall. The subdued demand was most visible in a sharp drop in overall traffic.

While occasion-driven categories like bridal wear, party dresses and beachwear suffered most, more need-based categories, as Rubin explained, like kids, beauty and sports, even outperformed our internal targets. In terms of regional impact, revenue growth decelerated across both the DACH region and rest of Europe, however, slightly more so in rest of Europe. DACH revenue growth decelerated by around 5.8 percentage points to 6.7% year over year. And rest of Europe, while still outperforming DACH, saw a deceleration in revenue growth by 6.8 percentage points to 12.6% year over year, driven mostly by a more pronounced negative impact in Southern European markets, which were among the hardest hits in terms of infections and also became subject to much stricter government lockdowns.

On the contrary, if we look at our Offprice business segment, we maintained a very strong performance throughout the whole quarter, recording revenue growth of 35.1% year over year, which is actually up 21.5 percentage points year over year. While our outlet stores had to close down as a result of the nationwide lockdown measures in Germany, our lounge campaign business saw an increase in order numbers by 43% year over year, thereby even exceeding our pre-corona expectations. This development was fueled by a combination of strong organic demand of customers looking for bargains and the additional mobilization of customers through newsletters, push notifications and also a very attractive campaign portfolio. The Other business segment developed largely in line with the overall group once corrected for baseline effects.

As you know, from previous earnings calls, our private label activities, which had historically been reported as part of the Other business segment, were significantly downsized in Q1 last year and are no longer reported in the other segment but now a part of the fashion store. Adjusting our last year's results for our private-label activities would have resulted in a pro forma revenue of around EUR 36 million for Q1, implying a growth of 3.6% year over year in Q1 2020. When looking at more the underlying drivers of our growth, so our key customer metrics, we see that while they are certainly not completely immune against the pandemic, they've proven to be relatively resilient, except for traffic growth, which has faced the strongest immediate deceleration among all the customer KPIs but still grew more than 20% year over year for the quarter overall. Let me now call your attention to three key developments.

The first one, we recorded stable, strong active customer growth, reaching almost 32 million customers in Q1, driven, as Rubin mentioned, by a particularly strong new customer acquisition, which also continued and even accelerated further in April. Second, customer order frequency reached another all-time high of 4.7 orders per active customer in the last 12 months, and, therefore, was also not severely impacted by what happened in March. And third, we also saw the last 12-month average basket size decline slightly by minus 1.5%, in line with historical trends, while on a quarterly basis, the basket size was down minus 3.4% year over year mainly due to the increased discounts and adverse category mix effects in light of corona. We believe that under comparable market conditions, we would have seen similar trends as last year.

And thus, we do not expect continued pressure on basket size to persist at this magnitude over the long term. As a result of these key developments, GMV per active customer grew by around 4% in the last 12 months despite the negative impact in March. Let's now look more closely at profitability. As already shared with you in our trading update in April, we see a negative adjusted EBIT, which is significantly below prior year and also below our pre-corona expectations going into the year.

This negative development is mainly driven by our fashion store business as a result of lower sales growth in the first quarter and an exceptional inventory writedown of EUR 40 million as a result of revised sales expectations for the current season. Within the fashion store, both regions, DACH and rest of Europe have been negatively impacted. The negative impact for rest of Europe, however, has been more pronounced due to the larger negative sales impact than in DACH, which also resulted in the higher proportion of the inventory writedown being allocated to rest of Europe. Furthermore, our decision to pull forward the mid-season sale and play it more aggressively led to an additional pressure on our gross profit, especially in Southern and Eastern European markets, where our customer base has traditionally been more discounter-themed.

At the same time, our Offprice business really benefited from its strong sales performance and improved its profitability in both absolute and relative terms year over year. Diving deeper into the major cost line developments, which you see on Page 15, there are three main effects which caused the deterioration in profitability year over year. First, gross margin declined by minus 4.6 percentage points year over year due to the exceptional inventory write-off on spring/summer stock, as well as the increased price investments with additional promotional activity, particularly in the fashion store business and also a higher share of the Offprice business. Second, our fulfillment costs increased year over year as a result of a lower level of utilization, higher sickness and absence rates in our warehouses, as well as the implementation of social distancing measures, which had a negative short-term impact on productivities across our logistics network.

And thirdly, our marketing cost ratio continued to increase year over year as we stepped up our game on customer acquisition and engagement investments supported by our ROI-based marketing approach, which we have told you about on all past earnings calls for the last 12 months. And that mainly happened until the beginning of March. From mid-March onwards, we certainly adjusted our marketing approach by shortening the investment horizon for ROI-based marketing to keep a tight control on our spending. In contrast, admin costs continued to show an improvement year over year as a result of ongoing cost efficiency measures, and we also recorded a positive one-off other operating income from the sale of land for the construction of an additional campus building here in Berlin.

To provide you with an even more detailed transparency on our profit development, we have provided you with an EBIT bridge on Page 17, which tries to differentiate between the pre- and post-corona effects on our bottom line. If we first focus our attention on all developments apart from the corona impact, we would have ended the quarter with a small negative margin, yet slightly above market expectations. As already called out as part of our last earnings call, this was mainly driven by additional investments in pricing, marketing and convenience. First, an industrywide delayed season start into the spring/summer season, when compared to last year, led to an adverse product mix and overrepresentation of discounted prior-season items.

Second, an exceptionally strong Partner Program performance in Q4 caused a higher-than-planned wholesale overstock, which we sold off successfully in January, creating a drag on gross profit. And third, continued investments in customer acquisition and customer proposition improvements slightly increased our marketing and fulfillment cost ratios. These three effects combined would have resulted in a pro forma adjusted EBIT of minus EUR 24 million, plus EUR 4 million above the pre-corona market median consensus of minus EUR 28 million as of March 11. As mentioned before, COVID-19 resulted in three major hits to our P&L afterwards.

So we saw a negative sales growth in March, resulting in lower fixed cost digression and operating deleverage. We furthermore saw higher promotional activity, which we deliberately engaged into to partially compensate for lower-than-expected demand. And we saw an extraordinary writedown of inventories of EUR 40 million in Q1. In sum, these special corona effects have significantly deteriorated our profit by EUR 75 million year over year, resulting in an overall adjusted EBIT loss of EUR 99 million for the first three months of the year.

Turning now to cash-related items on Page 17. We recorded a positive net working capital, mainly driven by lower-than-expected sales and a resulting higher inventory position, up 33% year over year. Payables saw a smaller increase since we decided to pay suppliers in need of cash earlier for spring/summer merchandise as part of our COVID-19 partner relief program. And receivables slightly decreased, reflecting lower business volume toward the end of the quarter.

For capital expenditure, we saw a slight increased spending compared to previous year, in line with expectations. Overall, our free cash flow decreased by EUR 225 million year over year from minus EUR 78 million in the prior-year period to minus EUR 303 million in Q1 this year. This development was mainly driven by the significant operational losses, the increased net working capital and also our higher capital expenditure. As we conclude the section on quarterly financials, let us also take a look at the development of our liquidity position on Page 18.

Despite this unfavorable free cash flow development in the first quarter, we were able to maintain our strong liquidity position by proactively drawing down EUR 375 million from our general-purpose revolving credit facility. As a result, our cash balance at the end of Q1 amounted to more than EUR 1 billion, which allows us to navigate confidently through this challenging time without any need for additional financing or state loans. Before we go into Q&A, let me now turn to our updated outlook for the full year, which you see reflected on Page 22. Especially in times like these, it is important to follow a clear strategy and a clear direction.

With our starting point for fashion strategy, we believe we have the right strategy at hand. We remain laser-focused on growing our active customer base, deepening customer relationships, as well as driving and even accelerating our platform transition. Our direction and also our long-term growth ambition have not changed as a result of the pandemic. In our trading statement, we already updated you on the negative sales impact we observed in March.

Since then, we have seen a significantly more positive trading development in the first weeks of the second quarter. Looking at April, we've seen a faster-than-expected recovery of online demand for fashion and lifestyle products across most of our markets. Consumers seem to have overcome the initial shock and are gradually returning to previous patterns of fashion spending. Furthermore, we are seeing early signs of an accelerated channel shift from off-line to online across major markets.

Last but not least, we've successfully adapted our communication and commercial steering in a way that allows us to capture additional demand opportunities. As a result, we now expect Q2 to deliver double-digit GMV growth in the upper half of our full-year GMV range of 10% to 20%. In terms of profitability, we should be able to benefit from the faster-than-expected demand recovery, as well as our commercial and overhead cost-saving efforts, which are starting to unfold to full potential. As a result, we expect profitability around prior-year levels.

These recent developments are testament to the resilience of our business model and also the agility of our team and generally make us very confident for the full year. Despite significant remaining uncertainty with regards to the further evolution of the pandemic, we have, therefore, issued an updated full-year 2020 outlook last night, considering our learnings to date and our 2020 savings plan, as well as different scenarios for the second half of this year. Let me now provide you with some more details. Following our long-term strategy, we remain focused on driving growth and increasing our market share through continued investments in growing our active customer base and deepening our customer relationships, even under these exceptional circumstances.

We, therefore, expect GMV and revenues to grow by 10% to 20%. Keep in mind, though, that revenue growth is expected slightly lower than GMV growth, similar to the patterns that you've seen in the past, as a result of our accelerated platform transition. While our key focus remains on growth, we stay committed to pursue this growth in a profitable manner. Our 2020 saving plan ensures that we adjust our cost base to the new circumstances.

As a result, we expect to achieve an adjusted EBIT of EUR 100 million to EUR 200 million. We furthermore expect negative net working capital similar to prior year, as well as capex of EUR 230 million to EUR 280 million to fund our investments into our European logistics network and into our technology platform. As the year unfolds, we will continue to strive for the right balance between capturing additional growth opportunities on the one hand and protecting us from potential financial risk on the other hand. 2020 continues to be a year of major uncertainty, particularly with respect to the further evolution of the pandemic in the months to come.

In the event of a severe second wave of infections and a pronounced economic recession in Europe, we expect to come in closer to the lower end of our growth and profit outlook. In the absence of a second wave and in the case of a continued off-line-to-online shift, we would have the ambition to get closer to the higher end of the range and to return to our target GMV growth corridor of 20% to 25% as fast as possible. In capturing such potential opportunities, we would continue to prioritize growth and market share gains over short-term profits. Let me close by reiterating that Zalando has a clear strategy and a clear direction.

While the current crisis has had a negative short-term impact on our business, we do not expect it to change our longer-term trajectory and our 2023, 2024 targets, which we shared with you at our capital markets day last year. Our vision to build a starting point for fashion in Europe remains consistent and relevant going forward. Wherever possible, we are prepared to invest through cycle and drive long-term value creation. This concludes our presentation, and I would now like to turn it over to Q&A.

Questions & Answers:


And the first question is from Aneesha Sherman, Bernstein. Your line is open.

Aneesha Sherman -- Bernstein Research -- Analyst

Hi. Good morning. My question is about profitability. I know you just said that you would prioritize market share gains over short-term profits.

But even using the low end of your guided ranges for the full year, our calculation suggests that you expect to see a higher EBIT margin for the remainder of the year than the 3.5% that you achieved last year. So firstly, is that right that you expect margins for the remainder of the year to be higher than last year? And then can you comment on longer-term outlook? Is the evolution of your margins still expected to approach the 10% to 13%? Is that still your target range? Thank you.

Rubin Ritter -- Chief Executive Officer

Sure. So let's start with the short term. So yes, looking at our outlook, it's definitely right that we aim to recover and also actually gain compared to what you've seen in Q1, and maybe to explain a bit the overall dynamics. So yes, we've seen a special hit of around EUR 75 million in EBIT in Q1, as I explained.

But as we've also communicated, we have set up a savings plan for 2020, which aims to save several hundred million euros. And based on that plan and also our outlook in terms of growth for the rest of the year, we feel confident to achieve this type of profitability. So I'm definitely happy to confirm that. Keeping that in mind, I think it's also true that we will prioritize those sales opportunities because we see the ability and the opportunity to capture those opportunities by accelerating our platform transition and also grabbing additional market share under these exceptional circumstances.

In terms of longer-term profitability, we stay fully committed to our long-term target margin, so also happy to confirm that.

Aneesha Sherman -- Bernstein Research -- Analyst

OK. Thank you.


The next question is from Volker Bosse of Baader Bank. Your line is now open. Please go ahead.

Volker Bosse -- Baader Bank -- Analyst

Three questions from my side. Congratulations on your momentum and your ability to weather the storm. First question is regarding your sales growth in Q1 and the plus 39% in April. Could you highlight some regions -- country which are most dynamic in regards to acceleration of customer growth? And second question is, do you expect any disruptions, noticeable disruptions in your logistics centers or on the supply side, for example, due to the current lockdown of production facilities in Bangladesh or so? And third question is regarding your earnings indications.

Is it right to assume that fulfillment, as well as marketing costs in percentage of sales to remain up year on year, but gross margin should see some improvement for the rest of the year just to see where the margin improvement comes for the second half? Thank you very much.

David Schroder -- Chief Financial Officer

All right. In terms of growth profile and regional split, I think we're definitely seeing major local differences between the different markets. And that's not a surprise given that also the countries have been hit very differently by the pandemic and also have instituted very different lockdown regimes. So in general, what we are seeing is that Central European markets, so Germany, Austria, Switzerland but also Benelux countries are recovering faster and are also showing among the strongest growth rates in the past few weeks, whereas, I would say, the picture is rather mixed in Northern Europe and Eastern Europe.

And we still see a slower recovery in Southern Europe. But obviously, for the longer-term outlook, our ambition level for all these markets hasn't changed, so we mainly see it as a temporary mix effect. In terms of your supply chain-related questions, we haven't seen major disruptions in our logistics or supply base. I think due to the very proactive measures that Rubin outlined as part of his presentation, we've been lucky enough to keep operating all our warehouses throughout this crisis, also supported by the great dedication and motivation of our team.

And therefore, we've been actually able to even help other partners that were not so fortunate or did not have such a reliable logistics backbone by offering them access to our logistics network via ZFS. And on the supply side, I think we've commented already before corona hit us because if you remember, in January, it was mainly a supply risk story not yet a demand risk story. We already commented back in February that our supply base is very diversified across multiple countries in Asia but also in Europe and across multiple brands and factories, thousands of brands and factories. And therefore, we also do not see a major risk.

We are trying to help our partners wherever we can. In terms of indication with regards to P&L development for the full year, I think I wouldn't want to give specific guidance on a quarterly level or just the second half of the year. But if you look at the full year, I think what you should expect is that gross profit and fulfillment costs are lower than last year, gross profit because of the exceptional writedown in Q1 but also higher discounting pressure that we've seen and also expect to see for the end of season sale in Q2, in particular, and fulfillment costs because of the higher absence rates and also the cost of the protective measures that we've put in place to ensure our business continuity. And then you would see improvements year over year most likely in our marketing cost ratio and also in our overheads where we are benefiting from the results of our 2020 savings plan.


[Operator instructions] And the next question is from Tushar Jain, Goldman Sachs. Your line is open. Please go ahead.

Tushar Jain -- Goldman Sachs -- Analyst

Hi. Good morning. Two questions. I just want to understand, as the stores open in Germany, are you seeing any kind of a like de-acceleration in the online growth as customers have more choice to shop from? And second question on ZMS.

I just want to understand how that got impacted during COVID-19 and how do you see the recovery happening there. Thanks.

David Schroder -- Chief Financial Officer

Sure. Let me take those two questions. So on stores reopening, we don't see that that slows down our recovery in the sort of last days. Obviously, customers again have more choice, but I think customers also again have more impulse to buy.

And I also believe that many customers still remain cautious and prefer e-commerce as a way to shop but also keep up social distancing and also to be safe, so we don't see that this is negatively impacting our numbers. To your question on ZMS, we clearly saw that brands, given that they were impacted quite heavily, were more reluctant to spend initially. But we also see that this is now coming back especially as we position the Partner Program more and more as a means to drive growth in a time where growth is very difficult to obtain. So also here, we see the numbers coming back, and we also see some big brands that have, for the first time, signed up to ZMS.

So on the long term, this makes us even more positive on the ZMS opportunity.


The next question is from Rocco Strauss, Arete Research. Please go ahead.

Rocco Strauss -- Arete Research -- Analyst

Hey, good morning. A couple of questions from me. Firstly, with the EUR 100 million initial working capital investment to pay brands quicker here, are you actually seeing existing brand partners routing more inventory toward Zalando in favor of other platforms? And is this part of what attracts like the couple of new brands or the 50 new brands that you had flagged onto the platform? Secondly, probably a follow-up here. I think you gave us like a 1% of GMV figure for media service last quarter.

I was wondering, with CPMs or cost of impressions actually significantly down across web and most social media platforms, are you seeing brands spending substantially more here in recent weeks especially? I guess the origin of the question is more as an additional percent of GMV, driven by ZMS. Could that actually -- or that could be significantly accretive to your margins this year. Is that the right way to think about that? And then probably thirdly, also, like on the 39% new customer growth, could you help us a bit in how this actually translates into active customer growth?

Rubin Ritter -- Chief Executive Officer

Yeah. So maybe to quickly comment. So the EUR 100 million that we earmarked for paying brands early, that has been very successful and well received. In terms of where brands route the inventory, I think we give them a number of opportunities to route inventory our way.

And there, I think the initiatives around the Partner Program and the connected retail are even more impactful. And of course, we want to use this time to help out but, of course, also build deeper relationships. And we see brands devoting more and more attention but also more inventory to our platform, which we think is very positive. On ZMS, I probably already said what I can say.

So it was impacted especially in March, when all the brands are kind of in shock and, of course, also holding back on their spending. But we also see it now recovering because, obviously, brands also need to clear and sell-through their spring/summer merchandise. So we see ZMS on a good trajectory to recover from the March impact. On the third question, 39% new customer growth year over year in April, I mean, given that we are here commenting on the going quarter, I think this is already giving quite a bit of disclosure on how we are tracking on customer growth.

Obviously, gaining more new customers is always good for active customer base. That's why we do it because we want to drive, as you know, deeper customer relationships but also higher numbers of active customers across Europe.


And the next question is from Charlie Muir-Sands, Exane BNP Paribas. Your line is now open. Please go ahead.

Charlie Muir-Sands -- Exane BNP Paribas -- Analyst

Congratulations. Thank you for taking my questions. Firstly, it's very helpful that you put that chart up showing the trajectory of the recovery through April. I just wondered if you could give us a slightly more precise number, like the minus 8% you gave about what the GMV growth has been in the last five weeks.

And then secondly, on the cost-saving program, which I think you quantified at EUR 250 million, how should we think about that in terms of how much is related to fully variable costs like couriers as opposed to underlying operating costs such as admin expense? And how much of that should put a lower base into 2021 versus be a relatively temporary efficiency? Thank you.

David Schroder -- Chief Financial Officer

Well, I think my answer to your first question will be rather brief. As Rubin just said, I think we do not want to provide much more color for the current quarter than we already have. But I guess the comment on expecting to be in the upper half of the 10% to 20% corridor for Q2 gives you a good idea of what we are currently seeing. On the cost-savings program, I think we communicated an overall number of EUR 350 million, EUR 100 million thereof being capex.

Keep in mind, most of these capex savings actually are driven by postponements of projects, o you'll see many of those actually come back at a later point once we have more visibility. And therefore, we have also included a range of capex spending in our guidance. The remaining EUR 250 million non-capex-related savings roughly split up in two-thirds commercial savings and one-third overhead cost savings. On the commercial savings, we actually want to take a very flexible approach, just like we've done successfully in the past few weeks.

So whenever we see the opportunity to accelerate and to actually invest more marketing to capture more market share with a good ROI, then we'll also do that. And therefore, we will not stick to a specific target for the full year on especially this bucket. On the overhead costs, on the other hand, we definitely aim to reduce our overhead costs for the full year. And that will then obviously also help the baseline and the operating leverage for next year.


And the next question is from Anne Critchlow, Societe Generale. Your line is open. Please go ahead.

Anne Critchlow -- Societe Generale -- Analyst

Good morning. Thanks for taking my questions. The first one is about connected retail. Please, could you just remind us how that works in terms of commission and how profitable it is compared to, say, Partner Program? And then the second question is about sales in April.

Are you seeing any recovery yet in those categories that were hit worst when COVID-19 first struck? So beachwear, wedding dresses, party dresses and so on.

Rubin Ritter -- Chief Executive Officer

Sure. Let me comment on the first one. Also, maybe just briefly, we still have many people that want to ask question, I think about 10, and we want to make sure we get to everyone. So we will make our answers slightly briefer.

So in connected retail, it is a program that we are scaling over the last years, and it's really still in the very early stages. So here, also, the focus is not on profitability. Maybe that is the first comment. And second comment is in terms of its mechanics, it works similar to the Partner Program in terms of how we charge commissions and how we think about setting incentives.

David Schroder -- Chief Financial Officer

And on your second question regarding category development and recovery, we are continuing to see strong traction in the need-based categories that we mentioned, so kids, beauty and sports. But we are also now seeing an uptake in the other categories with some minor exceptions, so I think where we are still not seeing an uptake on the very occasion wear-driven categories like dresses and beachwear. And I think there's obvious reasons for it. If people don't know whether they can actually go on vacation, they probably also don't need so much new beachwear to complement their outfit.

But we'll see how that develops. And yes, as we said, we are seeing strong growth regardless.


And the next question is from Rebecca McClellan, Santander. Your line is open. Please go ahead.

Rebecca McClellan -- Banco Santander -- Analyst

Yes. Good afternoon. Just one question from me, please. My understanding, sort of the assumptions embedded in your full-year guidance, is that you're expecting gross margin to sort of be under pressure in the second quarter, but that should even out over the second half.

What's your assumptions about the sort of competitive inventory activities in order to sort of unwind some of the installment stock which is still tied up? And I suppose I'm fairly surprised that you're not slightly more conservative about the second-half gross margin in view of that.

David Schroder -- Chief Financial Officer

Yes. So I guess, as explained, we definitely saw strong gross margin pressure in Q1. We also expect some pressure in Q2, not so much driven anymore by exceptional write-offs but now really driven by higher promotional activity in the market overall. I think it's to be expected with so much stock sitting on the shelves in many off-line stores.

There will be much more aggressive end-of-season sale for the whole industry, and that's something we need to obviously be mindful of. For the second half of the year, what we are hearing from the industry is that actually, many retailers have dramatically reduced their orders for the second half of the year, and that should help to get back to a more normalized promotional environment. But as you can see from our range, we obviously consider very different scenarios as well.


And the next question is from Adam Cochrane, Citi. Your line is now open. Please go ahead.

Adam Cochrane -- Citi -- Analyst

Good morning. Two quick questions, if I may. The social distancing that you have to influence in the warehouses and the less efficiency, is that something that will carry on, or as time has gone on, you've managed to improve the methods of working so that they won't necessarily be a permanent change in terms of how efficient you are? And then secondly, on the zero commission that you're currently charging for connected retail, how do you make sure that the retailers stay with you after that period is finished? And have you agreed what the commission goes to once that period is up? Thanks.

David Schroder -- Chief Financial Officer

So on the social distancing in our warehouses, I think we need to assume that it stays in place as long as the pandemic lasts and until a cure or therapy has been found. Obviously, we are getting better and better in dealing with the situation. Our employees are adapting. We are seeing slight improvements in absence rates in the past few weeks.

And as Rubin said, we are also building up our own testing capabilities, and all these things should have to at least ease the effect of it. But we still, as I said, assume a higher fulfillment cost ratio for the full year also driven by these additional costs.

Rubin Ritter -- Chief Executive Officer

Let me maybe comment on the question on connected retail. So the zero commission that we charged in April and May was very clearly positioned as something that we do to help bricks-and-mortar retailers in this very difficult situation, and that's also how it was understood. And I think it's clear to everyone that we will not forever offer this as a free service. We have not yet decided on what we do with commissions in June.

We'll play that by ear and decide end of the month. But of course, we are hopeful and positive that retailers also will stay in the program once we start to charge commissions again simply because we hope they like the program, right? We hope they understand it helps them to reach customers, to drive volume. And in this context, we also should keep in mind that many bricks-and-mortar retailers already were dealing with reduced volumes before this whole corona thing started. So it's only making a situation that already was difficult even worse.

And we hope retailers like the program, and we hope it helps them, and we hope they stay for longer. Your line is now open. Please go ahead.


The next question is from Olivia Townsend, UBS. Your line is now open. Please go ahead.

Olivia Townsend -- UBS -- Analyst

Hi. Yes. I have two questions, please. My first question is on wholesale inventory.

With such strong partner program growth, higher visibility on the site, special partner program, discount events, I'm wondering, have you reduced the amount of wholesale stock you're buying for Q2? And is it likely that we see another quarter this year where wholesale stock needs to be cleared like in Q1? My second question is just on return rates. I wouldn't be surprised if I was the only person who has a lot of online orders in my house at the moment that I haven't returned yet. But if I'm not, I'm wondering, can you tell us a bit about what happened to return rates in Q1 and whether you are expecting to see more returns of Q1 orders come into Q2 and then what impact this might have on revenue? Thank you.

David Schroder -- Chief Financial Officer

All right. Let's start with the wholesale inventory. I think what we've done here clearly was that as it became clear that demand would suffer from the pandemic, we instituted a two-week buy increase for both spring/summer and for winter season. Since then, we have resumed our fall/winter buying.

And also, winter buying is essentially in line with our full-year outlook, although it takes into account an accelerated platform transition, of course, so a higher share of the Partner Program compared to last year. With regards to spring/summer, we've actually, yes, cut the budget, and therefore, we are now in a good position to drive additional sales together with our partners. And in some cases, the way to think about it is not as splitting the pie or sharing the pie. I think the way to think about it is together, we can make the pie bigger.

So if we just look at our own logistics capacity, it's, on the one hand, great to see how resilient we have been, but obviously, also, our capacities are not unlimited especially if we need to adhere to social distancing at the same time. And therefore, leveraging more partners also in the drop/ship model has also helped us to capture some of that additional demand opportunity faster than we could have done without them. And therefore, I would really think about it more as additive for the second quarter for sure and probably also for the second half of the year and not as competing. On return rates, I think it's too early to tell, to be honest.

In Q1, we've only seen three weeks of pandemic impact in a way, right, and more than two months of normal trading. So I think it will remain to be seen what happens to return rates. I guess you could imagine, though, that if you look at the key drivers of the return rate, and you see that customers are now at least buying a higher proportion of categories that typically show lower return rates. And a lower proportion of categories like dresses that typically show among the highest return rates, we should see a slight benefit come through.

But we'll talk more about that at the earliest after our Q2 results.


The next question is from Simon Irwin, Credit Suisse. Your line is now open. Please go ahead.

Simon Irwin -- Credit Suisse -- Analyst

Good morning, everyone. Firstly, can you just talk a little bit more about some of the new brands that you're bringing on to the Partner Program and particularly onto ZFS as to whether you're now seeing higher price point brands coming onto both parts of the program? And then kind of related to that, how does the acceleration of the Partner Program and some of the other moving parts affect your thinking about drop-through, particularly as we go into kind of next year and subsequent years? Is the drop-through going to be effectively delayed because you've got higher volumes? Or actually, does it drop through earlier because you're kind of bringing more of this upfront?

Rubin Ritter -- Chief Executive Officer

Sure. So in terms of higher price points, as you will remember, we said at the beginning of the year that we drive a specific initiative to target more the premium and luxury segment, which we have served also in the last years but where we think there is a lot of opportunity for us to grow as we see customers really also shop across price points. And in terms of attracting brands to the Partner Program or to our platform overall, of course, we also are very focused on the premium and luxury segment, also because these areas have been impacted just as much as other areas. So also here, we see an increased interest to work with us.

On your second question, in terms of the drop-through of Partner Program, really, right now, our focus is to drive this corona response in the sense of helping the ecosystem and bringing onboard brands and supporting them with ZMS, ZFS and connected retail. And that is the major focus. Obviously, right now, for example, on connected retail, we are giving these special offers in terms of waving commission. So the drop-through of the Partner Program is not our major concern right now, but we want to use the opportunity to really accelerate the growth.

I think for the outlook of the coming years, there is no update, and that has not changed in any material way.


And the next question is from Georgina Johanan, JP Morgan. Your line is now open. Please go ahead.

Georgina Johanan -- J.P. Morgan -- Analyst

Good morning. Thanks for taking my questions. Just two clarification questions from me, please. First of all, when you talked about current performance in GMV being back in double-digit territory in April, can you just confirm that the wholesale business was also growing by double digit in the months, please? And then the second question, you mentioned that you expected Q2 profitability to be similar year on year.

Just so I'm absolutely clear, was that on an absolute profit basis, i.e., close to EUR 100 million of EBIT? Or did you actually mean a similar margin year on year, please?

David Schroder -- Chief Financial Officer

In terms of current performance, I think we don't see any difference between wholesale and Partner Program. I think both are performing strongly. Hope that answers your question. I think on the profitability, we've given as much color as we want to give.

So I think you'll have to wait a bit to see our Q2 results after Q2's earnings.

Georgina Johanan -- J.P. Morgan -- Analyst

No. But sorry, I just didn't quite understand the term. By profitability, do you mean absolute, or do you mean percentage?

David Schroder -- Chief Financial Officer

Well, I said we said what we wanted to say, and I think the rest is open for your interpretation.


And the next question is from Jurgen Kolb, Kepler Cheuvreux. Your line is now open. Please go ahead.

Jurgen Kolb -- Kepler Cheuvreux -- Analyst

Thank you very much. I had two questions on my side left. I was wondering if you could maybe give us a little bit more indications about the impacting factors on the gross margin here, specifically looking at the Lounge business. Obviously, a lot of inventory pressure from the brands and how much that affected your group gross margin, assuming that this pressure might disappear a little bit going forward in the second half of the year.

And then on the beauty side, strong growth. Could you remind us if you've added new brands to your beauty business and in how many countries you are currently offering that category? Thank you.

David Schroder -- Chief Financial Officer

Yes. So I mean, from our perspective, the outperformance of lounge that we've seen and that we continue to see is not a problem in terms of gross margin. It's actually a big opportunity in terms of more customer engagement, more growth and, essentially, also more EBIT because as you've seen also in the past quarter, lounge is also delivering quite a good EBIT margin. And therefore, we don't really see it as a drag on overall profitability for the group.

Obviously, it has a different P&L profile, but that's not concerning us.

Rubin Ritter -- Chief Executive Officer

On your second question with respect to beauty, we are currently working with more than 11,000 -- sorry, 11,000 products that we offer from about 300 brands. And we are offering beauty products in nine of our markets.


The next question is from Ms. Wilson, Berenberg. Your line is now open. Please go ahead.

Michelle Wilson -- Berenberg -- Analyst

Hi, good morning. Just a question on the marketing cost. You mentioned at the trading update a lower marketing cost ratio for 2020. I just wanted to understand if that will be driven by lower ad rates, which is something Wayfair's has been commenting on in recent days, or whether it's driven by the volume of marketing.

And if it's on volume, when should we start to see that coming down?

David Schroder -- Chief Financial Officer

I mean, essentially, it's driven by our advertising-steering approach, right? As we've commented in the past, we are not steering marketing buyer budgets anymore. We are steering it via ROI and via certain investment horizon, and we reduced that investment horizon over the past few weeks to make sure that we do not do investments that turn out to not have a good ROI in the long term. And since we are working mainly with machine learning and algorithmic marketing models, obviously, we need to make sure first that those adapt to the new reality. Actually, the good news is we've seen that our models adapted quite quickly and therefore, we've already started again to increase the time horizon, but we are not yet back at pre-corona levels.

But if everything continues as planned, I think we'll obviously aim to drive more growth also via marketing in the months to come. And that's obviously one key driver of my comment. I think another key driver is that at least for a few weeks, we've also seen cost-per-click and media costs come down. So for a while, you could do marketing like 10 years ago.

And we wanted to capture some of that opportunity where others were still much more conservative in their spend. But we've also seen many come back to the table now, and therefore, I think the whole situation is normalizing again.


The next question is from Mark Josefson, Pareto Securities. Your line is open. Please go ahead.

Mark Josefson -- Pareto Securities -- Analyst

Thanks. It's Mark Josefson, Pareto. Congratulations on the ability to currently bounce back to a stronger proposition. I have two questions.

First one, with respect to your guidance, you outlined the drivers to the top and bottom of the full-year corridor, so no big second wave. You may end up at the higher end of the 10% to 20% growth in GMV but reduces if there is a second wave. Can you provide some color to the drivers for the top and bottom of this 10% to 20% range in terms of the mix between wholesale and Partner Program? I think there's a three-point differential in Q1, but April seems to be a bit closer. Can we have a bit of color for the top and bottom? The second question is a bit more theoretical, but I enjoyed your three examples of April.

Great growth with respect to new customers. I think it was 39% or so. You've already alluded to a younger proportion there, being under 25. My perception is that this age group may be from a bit more skippy, maybe jump off the ship quicker than more mature customers.

Are there any early thoughts on how you retain this newer, younger customer further out? Thanks very much.

David Schroder -- Chief Financial Officer

Yes. So on the scenarios, I think, obviously, there are many different drivers that could potentially impact where we land. I think the key driver, though, as you said yourself, is going to be do we see a second wave or not. And if so, how strong is that wave going to be? And with regards to GMV revenue differential, I think we would not expect to see anything out of the honor compared to the past, although we see, obviously, an acceleration of the Partner Program.

Rubin Ritter -- Chief Executive Officer

And with respect to your second question on the young customers, maybe it's important to highlight that also over the last years, we have grown the young customer segment over proportionately. And even though young customers might be more willing to switch, even though we don't really see that so much in our data, so if you could have that assumption. On the other hand, it's also important to understand that these customers have a potentially very big lifetime value. So if you acquire them early and they become loyal customers and then they graduate and then they start to earn money, obviously, also their spend power increases.

And if they have a high shopping frequency with Zalando, likelihood is high that also their spending will increase quite a bit in the future. This is why we are very keen to acquire young customers. And this is why we are also not concerned about the churn rate. We also know how to keep them engaged.

I just also would like to highlight again that all age groups are growing, just the youngest one is growing the fastest.


And the last question for today is from Mr. Genelot, Bryan Garnier. Your line is now open. Please go ahead.

Clement Genelot -- Bryan, Garnier and Company -- Analyst

Yes. Good morning. Just one question from my side. Regarding your ambitions to, indeed, suspend your offer, do you think that the current corona COVID and the forced closure of your stores over two months, and I think you waived some high-end and even affordable luxury brands structurally, left on your marketplace right now or in a few months or maybe just next year?

Rubin Ritter -- Chief Executive Officer

I need to ask you to repeat the question. The line was not very good. I think I heard you were asking about luxury, but we didn't fully capture your questions. If you could please repeat.

Clement Genelot -- Bryan, Garnier and Company -- Analyst

Do you think now the current pandemic will encourage brands to list on your marketplace? Actually, high-end brands and also affordable luxury brands, which is part of your midterm ambitions.

David Schroder -- Chief Financial Officer

Yes. Yes. At the beginning of the year, we said premium and luxury is a big focus, and the current opportunity is to drive the Partner Program and, by the way, also to drive new wholesale relationships, right? So we shouldn't get above that as well. Also, that holds also true for premium and luxury brands, so I think right now is a good opportunity to start working with them.

So for the long term, this initiative to grow with premium and luxury will definitely benefit from the initiatives we are now driving on the Partner Program.


Ladies and gentlemen, this concludes today's Q&A session, and I hand now back to Patrick Kofler.

Patrick Kofler -- Head, Investor Relations

Thanks, everybody, for joining today's call. If you have any open questions, do not hesitate to contact us. We hope you all stay safe and healthy. Thank you for joining again.

And goodbye and have a great day.


[Operator signoff]

Duration: 74 minutes

Call participants:

Patrick Kofler -- Head, Investor Relations

Rubin Ritter -- Chief Executive Officer

David Schroder -- Chief Financial Officer

Aneesha Sherman -- Bernstein Research -- Analyst

Volker Bosse -- Baader Bank -- Analyst

David Schrder -- Chief Financial Officer

Tushar Jain -- Goldman Sachs -- Analyst

Rocco Strauss -- Arete Research -- Analyst

Charlie Muir-Sands -- Exane BNP Paribas -- Analyst

Anne Critchlow -- Societe Generale -- Analyst

Rebecca McClellan -- Banco Santander -- Analyst

Adam Cochrane -- Citi -- Analyst

Olivia Townsend -- UBS -- Analyst

Simon Irwin -- Credit Suisse -- Analyst

Georgina Johanan -- J.P. Morgan -- Analyst

Jurgen Kolb -- Kepler Cheuvreux -- Analyst

Michelle Wilson -- Berenberg -- Analyst

Mark Josefson -- Pareto Securities -- Analyst

Clement Genelot -- Bryan, Garnier and Company -- Analyst

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