Pets have been gaining popularity for years. And e-commerce is booming during the pandemic. Europe’s leading internet retailer for pet supplies, Zooplus, uses both. By Ralf Witzler, Euro am Sonntag
Europa is a growing market for pet food. For years. The number of cats in households alone has increased by around a quarter to 84 million in the past ten years. The European Association of the Pet Food Industry (Fediaf) anticipates an increase in the market volume since 2018 from 24.5 billion euros to 26.3 billion this year and a further increase to 30.6 billion by 2024. The social isolation in the pandemic seems to give the animal trend an additional boost. Reports from animal shelters reporting increased demand are increasing. Four-legged social contact is required. As in Frankfurt am Main, where dog registrations in 2020 will have a record year, it should also happen elsewhere.
For Zooplus, Europe’s leading pet food retailer, these are not only good prospects. The internet sales channel is also fundamentally in vogue and is experiencing a boom during the pandemic. Shop closings in stationary trade and the reduced shopping pleasure due to the Corona requirements are driving online retailers towards customers. Zooplus was able to reduce the average cost of acquiring a new customer from 15 euros to nine euros and the expenditure for advertising and marketing from 3.3 percent of sales in the first nine months of the previous year to 1.6 percent from January to this year Drive back September. Nevertheless, the number of customers rose by nine percent to 8.1 million within twelve months as of September 30th.
loyal customers
This fits in with the high rate of recurring sales, which rose from slightly more than 91 percent in January of this year to a good 98 percent in October. In other words: out of 100 euros in sales in the past twelve months, 98 euros in sales are made again without any additional new business.
The course of business in the first nine months also confirms the very positive development for the company in other key figures: The number of orders that show a negative contribution margin after deducting the variable logistics costs fell from 17 percent to twelve percent.
Double-digit sales growth
Zooplus is on the market in 30 European countries. According to management, sales should grow by double digits in all regions this year. In the DACH area, the region with the highest turnover with 512 million euros, Zooplus expects an increase from eleven to 15 percent. In Central and Eastern Europe, sales are expected to increase by almost a third, as in 2019. In the coming year, Zooplus intends to exceed the turnover threshold of two billion euros and is forecasting revenues in a range of 2.04 to 2.14 billion euros. The operating profit (Ebitda) should be between 40 and 80 million euros. That would correspond to an Ebitda margin between two and four percent.
Expansion: An attractive market, sales growth, costs under control and a trend-setting distribution channel. Investors take hold.
Recommendation: Buy
Target price: EUR 200.00
Stop rate: 129.00 euros
