Zalando SE (ZAL) Earnings Call Transcript & Summary

Good morning, and welcome to this investor conference call regarding the announcement of the acquisition of ABOUT YOU we made this morning. I'm joined by our 2 Co-CEOs, Robert Gentz and David Schroder as well as our CFO, Sandra Dembeck. Robert and David will give you a short presentation and overview of the transaction, particularly the strategic rationale and benefits. The team will be available for questions after. As usual, this call is being recorded. A replay of the call will be available on our Investor Relations website. Robert, I will now hand it over to you. Please go ahead.

Thank you, Patrick. And a very good morning, so for me, too, and thank you all for joining today's call. We're very excited about the planned acquisition of ABOUT YOU. ABOUT YOU is a greatly positioned online fashion destination and enterprise digital e-commerce platform that complements our operations very well. We admire how the team at the ABOUT YOU has built the company, and the acquisition represents a decisive step in strengthening and executing our strategy as we intend to build the leading Pan-European fashion and lifestyle e-commerce ecosystem. So number one, there is a very strong fit between ABOUT YOU and our strategy. ABOUT YOU's assets in B2C and B2B are highly complementary to ours. As a combined group, we will be able to cover an even larger market share in Europe. Number two, on a B2C vector, we will pursue a dual brand strategy. The strategy will allow us to penetrate the market more effectively with 2 distinct online experiences, serving distinct customer needs. Number three, in line with our B2B strategy, SCAYLE, the SaaS-based digital e-commerce platform, which is an integral asset of ABOUT YOU will perfectly complement Zalando's e-commerce operating system sales. The integration will enable brands and retailers to manage their multichannel business across Europe within one unified platform. This platform will consist of logistics infrastructure, software and service offerings regardless of whether they take place on- or off, both around the platform. Number four, the combination brings together 2 founder-led teams with a strong entrepreneurial track record. We have known ABOUT YOU team for many years now, and we have a huge mutual respect for each other. Their ability to spot opportunities in the market and execute on them in a fast and impactful manner has always impressed us. It is rare to have teams that share similar company cultures and values and still have built different capabilities. We're very excited to be bringing together 2 founder-led companies and highly complementary capabilities. Number five, we see a very compelling value creation potential that the 2 companies operating in the same industry can generate. We'll create value by collaborating in a wide range of areas such as B2B, logistics, payments and commercial activities. Overall, we believe ABOUT YOU is an excellent fit for us in terms of culture, joint vision and complementary capabilities. Let's now move deeper into the transaction itself on Page 3. So first of all, let me talk you through the key terms of the transaction. We plan to acquire 100% of the share capital in ABOUT YOU via voluntary public tender offer to all its shareholders. The offer of EUR 6.5 per share represents a premium of 12% to the median analyst target price of EUR 5.8 and a premium of 107% to ABOUT YOU's 3 months volume-weighted average share price as of yesterday. This implies an equity value of approximately EUR 1.1 billion. In light of the significant shareholdings in ABOUT YOU, Otto Group, Otto Family, HEARTLAND and ABOUT YOU management entered into binding agreements to sell their ABOUT YOU shares, representing about 73% of ABOUT YOU's share capital. So to underpin our conviction and the value creation, this transaction unlocks will confirm our medium term for the combined group. So Zalando Group, including ABOUT YOU is expected to grow GMV and revenue until 2028 with a 5-year CAGR between 5% to 10%, resulting in an even larger share, at a larger scale. On profitability for our combined group, including ABOUT YOU, we expect by 2028 adjusted EBIT margin of 6% to 8%, yielding a significant increase in absolute EBIT enabled through this transaction. We expect to realize significant group EBIT synergies of around EUR 100 million per annum in the longer term in areas such as B2B, logistics, payments and commercial collaboration. The transaction will be financed 100% from existing liquidity and still gives us ample leeway for further investments. Closing is currently expected for summer 2025 next year. The transaction is subject to obtaining relevant regulatory approval. Let me provide you with an overview of ABOUT YOU's business profit on Page 4. Since ABOUT YOU is a public listed company, many of you already might be familiar with this profile. So personally, I've long admired ABOUT YOU and its achievements. Let me share my thoughts. ABOUT YOU's business started as a fashion online store, yet evolved into 2 distinctive and highly successful business lines. On the B2C side, ABOUT YOU has been able to grow over the last 10 years since its founding to a significant base of over 12 million customers, mainly through influencer-led and discovery of fashion styles and great e-commerce execution. Geographically, ABOUT YOU has similar a footprint to Zalando with about 50% DACH and 50% rest of Europe. On the B2B side, the ABOUT YOU Group enables through its company SCAYLE enterprise customers in the fashion and lifestyle space to leverage its own proprietary enterprise commerce platform. This is a fast-growing and highly profitable Software-as-a-Service solution. The team grew the business already to almost EUR 50 million software revenues and these recurring software revenues come with an 85% gross margin. ABOUT YOU is currently listed on the Frankfurt Stock Exchange. Its headquarters are located in Hamburg, Germany, and this has about 1,250 employees. The key financials for the last financial year, you can see on the right side of the page, almost EUR 2 billion in revenues with positive adjusted EBITDA. All 3 founders are excited to continue to lead their successful business under Zalando Group following this transaction. Let us now revisit key reasons why this deal makes so much sense to us in more detail. Turning to Page 5. During March, we announced our updated strategy to build the ecosystem for fashion and lifestyle e-commerce. Teaming up with ABOUT YOU plays right into the strategy. Let's recap our ecosystem strategy quickly, which expands our scope towards the ecosystem while building on proven strengths along 2 growth vectors. First, our growth vector of our consumer business. Here, we're moving beyond our transaction focused fashion platform by differentiating through quality, expanding into lifestyle propositions and making fashion discovery more inspiring and maintaining and engaging consumers earlier in their discovery journey. Second, our new growth vector of our B2B business. Here, we are evolving from enabling partners on Zalando to offering solutions that help brands run the e-commerce business of Zalando as well. With the planned transaction, we can create something special for consumers and brand partners alike. In B2C, ABOUT YOU's addition will enable Zalando to execute a dual brand strategy with 2 distinct and separate experiences. This dual strategy allows us to better serve specific needs of customers focusing on quality, lifestyle and inspiration. In B2B, SCAYLE will perfectly complement the software offering of ZEOS platform. By combining our software capabilities with SCAYLE, we can offer merchants a holistic e-commerce operating system that enables them to run their multichannel business across Europe within one unified platform. Let's dive a bit deeper into each area, starting with B2C on Page 6. In B2C, the Zalando destination and ABOUT YOU destination will run separately, yet under one group and sharing only those capabilities where significant synergies are created, for example, in logistics and payment infrastructure. Yet each platform will not -- will stay largely independent with a strong leadership team at the helm. This will enable each platform to retain its own brand identity and target dedicated audiences with distinct customer experiences and convenience levels. So what do we mean by that? So Zalando appeals to fashion enthusiasts and is therefore more brand-led, differentiating itself by offering an unmatched selection of more than 6,000 lifestyles brands to its more than 15 million active customers. It excites customers with the best possible quality shopping experience relating to every part of the customer journey, the high-quality brand assortment, digital experience, sustainable inclusive brand choices as well as personalized convenience. Zalando is also building on these high-quality relationships to expand its role in customers' lifestyle journeys by turning categories like sports and kids and family into captivating experiences and by integrating content and data into commerce to offer personalized inspiration and entertainment. ABOUT YOU on the other hand appeals to young fashion audience and is therefore more style led. With a network of over 27,000 content creators, it leverages this community to celebrate individual styles, discover trends and entertain through live events or interactive formats. This created a vibrant fashion community buying from the brands and labels on their platform. So both platforms will continue to have overlaps and both approaches offers distinct and relevant value proposition. Yet in the future, we now win as a group and make us better as 2 players in the joint team. Let's now turn to Page 7, the strategic benefits for our B2B business and here, I will hand over to you, David.

Yes. Thank you, Robert, and good morning also from my side. Thanks for joining us for this exciting step in our company's journey. In B2B, SCAYLE will complement ZEOS, Zalando's e-commerce operating systems. ZEOS enables brands and retailers to run their entire online business. The operating system consists of logistics infrastructure, software products and service offerings. We aim to spearhead a new way of operating multichannel fashion and lifestyle e-commerce with ZEOS. ZEOS already has a strong physical infrastructure layer, our Pan-European logistics network comprising of 13 different fulfillment centers across Europe. On top of this, we aim to create significant value through our software layer. This also includes technology to seamlessly integrate into marketplaces like Otto, ASOS or ABOUT YOU. Here, Tradebyte, a leading marketplace integrator we acquired in 2016, forms the nucleus of our ZEOS software strategy. Ad we all know, one of the most important channels for merchants is, of course, their own e-comm. ABOUT YOU's enterprise digital commerce platform SCAYLE will complement our efforts to enable the crucial channel for our merchants. We already offer merchants fulfillment solutions for orders that are placed on their own websites and apps. With SCAYLE, we can now offer them much more holistic solutions and power their entire e-commerce business. Through SCAYLE, merchants can connect their entire shop experience with one single solution, from the storefront management and promotion engine over the order management system to the checkout experience. Whereas the fashion and lifestyle industry remains quite fragmented on the consumer and brand side, we continue to see a very strong case for consolidation on the infrastructure and technology side. As a group, we will overcome existing industry inefficiencies and create win-win-win opportunities for merchants, their customers and Zalando. You can see that ABOUT YOU's DNA is well aligned with ours, and that brings me to the next page, Page 8. We believe ABOUT YOU is an excellent fit for us in terms of culture, joint vision and complementary capabilities. We are both teams who have always believed in redefining fashion and lifestyle shopping by creating the best positive experiences for customers and partners. Our strategies and growth levers are highly aligned. ABOUT YOU is a purpose-built brand for everyone who cares about style. And it's an incredible business in that space with its style-led proposition, its inventory-driven discovery, influencer collaborations and exclusive private labels, all at the European SCAYLE. Its multi-tenant Software-as-a-Service commerce platform SCAYLE is fully focused on fashion and lifestyle enterprise customers and serving clients across Europe and soon also in North America. Zalando, on the other hand, is well recognized across Europe, and we built on an active customer base of 50 million people. We've built great relationships with the best brands in the world. We understand brand equity and brand, therefore, bet on us. Our own logistics network is the biggest purpose-built logistics network for fashion and lifestyle in Europe. On tech and data, a team of more than 2,000 software engineers and data scientists has built distinctive and proprietary assets. So let's think about the value creation this transaction can unlock on Slide 9. When we presented our strategy update in March, we already made it clear that our view on the overall market opportunity remains very bullish. We have strong conviction that we can cover a larger share of the EUR 450 billion European fashion market together. In terms of profitability, we continue to target an adjusted EBIT margin of between 10% and 13% in the long term for the combined group in both our growth vectors, B2C and B2B. So the transaction clearly underpins our long-term attractive financial profile. And the transaction unlocks significant value creation through both top and bottom line synergies by leveraging the combined strengths of both companies. In total, we expect to generate group EBIT synergies of around EUR 100 million per annum in the longer term. By nature of these synergies, they will be back-end loaded. A combined logistics network will enhance operational efficiency and drive warehouse utilization. Additionally, the combined payment infrastructure will reduce transaction costs, improve customer experiences through better payment options and open up additional monetization opportunities for our payments capability. Further value can be realized through commercial collaboration in areas such as buying and marketing, enabling us to capitalize on economies of scale and enhanced product offerings. Integrating both companies' B2B software unlocks cross-selling and upselling opportunities. By combining Zalando's marketplace expertise with SCAYLE's tailored solutions for merchants own e-comm, we will attract more B2B customers and increase our take rates with them through a more comprehensive e-commerce platform offering. This concludes the presentation, so let me briefly summarize the key takeaways from our side. First, the acquisition ABOUT YOU is a great and highly complementary opportunity to shape the future of online fashion and lifestyle. Second, this combination creates a leading multi-brand fashion and lifestyle group. Together, we will offer customers distinct experiences in the B2C growth vector and build a B2B powerhouse for the e-commerce industry in Europe. And last, but not least, this transaction unlocks significant value creation opportunities. We confirm our midterm targets for 2028 as well as our long-term ambition for the combined group. This transaction will have significant value for customers, partners, employees and shareholders. Let me therefore close by reiterating again that we remain laser focused on building the leading ecosystem for fashion and lifestyle in Europe, both organically and also through this transaction. Let's now open for your Q&A.

[Operator Instructions] Our first question comes from the line of Sarah Roberts with Barclays.

Just 2 for me, please. So just the commentary from Zalando over the past kind of couple of quarters around capital allocation has been around much more of a bolt-on M&A strategy and exploring maybe on the B2B side. Would you be able to give some more color on why you decided to acquire the entirety of ABOUT YOU versus maybe perhaps just the SCAYLE business? And then does this transaction make capital allocation in the form of shareholder returns in the short term at least less likely? And then on my second question, so ABOUT YOU, the rest of Europe business is still loss making. Can you provide some color on how you expect the transaction to drive profitability across both this business unit and ABOUT YOU as a whole into the midterm such that by 2028, you can grow the absolute EBIT number?

Thank you for your question, maybe let me first answer the first question, and then Sandra can answer the second question. So -- I mean, like in March, we laid out our strategy, with the ecosystem strategy, actually has these 2 growth vectors, the B2C and the B2B sides. And I think the beauty really of this transaction here is that this acquisition actually adds scale and capabilities on both of these sides, both on the B2C side, now with the dual brand strategy that we outlined, and on the B2B side, is this kind of a missing strategic piece that -- for our B2B really now complements the path that we have there. So -- and really now drive the growth. So it's really strategic and acceleration of the strategy that we outlined in March, and this how this acquisition should be seen. And Sandra?

Yes. You talked about capital allocations and likelihood of shareholder returns. I mean, it's a question that we, of course, will continue to ask ourselves. But in light of the use of cash that this transaction, definitely for this year, there won't be any shareholder return in that respect. In regards to how this transaction will drive profitability by 2028, so that we can actually confirm our midterm target of 6% to 8%. Here, it is really around the 2 businesses improving the underlying performance as is in line with expectations that have already been set, but also in regards to realizing a part of the synergies. And this is primarily in the areas of the commercial collaboration that can be around the buying, which can be around marketing efficiencies. It is about combining the payment platform, whereby we can reduce transaction costs. But it is also by having embarked on the path of actually combining the logistics footprint of both, thereby, therefore, we can drive efficiencies as well as better utilization. And then, of course, also on the B2B side, we expect this to also support the improvement in profitability by 2028.

The next question comes from the line of Monique Pollard with Citi.

My first question is just about the SCAYLE platform for ABOUT YOU. Just trying to understand how long you think it will take to integrate SCAYLE with ZEOS, so in order that you can offer, I guess, Zalando's performance solutions to partners that are not on your platform at all? And then the second question was just about what this means for a combined group CFO. Will you still be looking for new Zalando CFO? Or will you be taking someone from ABOUT YOU to take that larger role?

Yes, thanks for your questions. Let me start with the first one on SCAYLE. I mean the good news is ZEOS and ABOUT YOU are already working together. Actually, ABOUT YOU was the first channel we integrated when we launched multichannel fulfillment for our merchants. And so there is an existing integration that has been built. And that now obviously makes it fairly simple to turn this into a more holistic offering. And we're also excited about the opportunity to, over time, obviously, use some of our key assets and services like size and fit, like payments to further strengthen the SCAYLE platform. But the good news is we are already technically integrated and working together even before this transaction.

And on your question on the group CFO, so we're continuing to process obviously like the role of the Supervisory Board as well to lead this process. And once there is news to be shared, we'll share this immediately with you.

The next question comes from the line of Ashton Olds, Redburn Atlantic.

I have 2 questions. My first is just on sort of the 4 buckets of synergies you've given. Could you sort of quantify how those synergies are allocated across those 4 buckets? And then also the timing of synergies and how these differ across the 4 buckets? And sorry, I appreciate it's a lot but as a follow-on on that, could you just confirm whether the B2B synergies, the cost or revenue synergies, it sounded like there were revenue synergies on the call? And then my second question is just on the founders and the management team of ABOUT YOU. You noted that they've agreed to stay on. Given that they are selling their shares, how are you incentivizing them to stay for a while? Or could you provide any color on how long they're planning or the agreement you may have with them to stay owners?

Sure. Let me take your first question, which I think was indeed rather 3 questions in 1. But yes, I'll try my best. I think on the 4 buckets, I think it's fair to say that all of them, so logistics, payments, commercial collaboration and synergies in B2B add a substantial amount to an overall target of around EUR 100 million that we shared with you today. In terms of timing, obviously, you will see differences across these buckets. There are some that are easier to implement and also faster to implement, for example, the opportunities on the commercial side. Wherever we touch physical infrastructure or technical infrastructure, such as in payments and logistics, I think they are more back-end loaded because it will take some time to integrate and also to change the footprint of the logistic -- of the combined logistics network. And on the B2B side, obviously, I think it's probably the best way to think about it, these synergies really starting already fairly early, but then obviously becoming bigger over time as we build a truly holistic solutions for our merchants. And then on your last sub-question relating to B2B synergies, I think it's important to understand that we have synergies both on the revenue side where we mainly see cross-selling and upselling potential that we have with our B2B clients with this much more holistic solution that serves them not just on their platform business, but now also on their own e-comm business, thanks to the additional of SCAYLE. But then obviously, we also benefit from cost synergies because we are able to further increase the scale and also leverage efficiencies that Zalando has built in its operating system.

And on your question around the ABOUT YOU founders, as you said, for us, the ABOUT YOU founders, they are excited about the story that we now built jointly, was very, very important to us. So what they will do is part of the liquidity that they will get from the deal, they will reinvest into the Zalando shares and we take from the treasury share so that there won't be any dilution from a Zalando.

The next question comes from the line of Anne Critchlow, Berenberg.

I just wondered if you have a view of the current market shares in the DACH region in online apparel for both Zalando and ABOUT YOU? And are you able to tell us, for example, the number of customers that are active with both Zalando and ABOUT YOU in the DACH region?

Sure. I mean, as in the past, we are obviously mainly looking at the overall market in Europe, EUR 450 billion fashion turnover in total per year, it's a massive market. If you look at Zalando and ABOUT YOU, even together, we have a single-digit share in the market. And obviously, that varies a bit by region, but we are not breaking out regional data. And then on the second question regarding our customer base. I think, obviously, there's overlaps since we operate in very similar markets, right, Zalando operates in 25 markets in Europe, ABOUT YOU in 28. Many markets are covered by both platforms. As Robert has explained, though, even today, but even more so in the future, we think they offer distinct experiences, giving value to customers with a very bespoke experience, have a more brand-led experience, for fashion enthusiasts or a more style-led experience for young fashion audience. And so we think there will be -- as today, customers that prefer to shop on one of these platforms only, but we are actually more than happy if as many customers as possible shop on both platforms to allow us to maximize the share of wallet with them.

Our next question comes from the line of Nick Barker, BNP Paribas.

Just to follow up on the last one there for my end. Are you able to provide a color -- a number to the customer overlap between Zalando and ABOUT YOU at all? And then secondly, the question would be kind of what level of technical integration do you plan for and what execution risks come with this?

Again, on the first one, I think David explained like there might be -- there is some overlap, but I think we're actually happy with all because it actually allows us to get a strong share of wallet, and it's 2 distinct experiences in the past, even more so in the future. Yes, so I think as a team, we're able to cover these larger share of the market. But we don't share or we don't have any detailed kind of customer overlap numbers that we can share. On the execution?

Yes. On the execution side, I think it's important to understand that, yes, we should look slightly separately at B2C and B2B. On B2C. On B2C, we’ll continue to run the 2 platforms, as we said, and they both have their own technical backbone. ABOUT YOU actually runs on the SCAYLE platform. Zalando, as you know, runs on our proprietary tech platform that will continue to be the case going forward. But as I explained, there are obviously certain elements of our tech platform, like size and fits, like payments that we think we can more tightly integrate over time with the SCAYLE platform, so that's also ABOUT YOU on the B2C side can benefit from these services to provide an even better customer experience. However, I don't see any related to technical integration given that both platforms run on their own technology stack, and as I said on the B2B side, SCAYLE and our own B2B suite are already integrated even prior to the transaction.

The next question comes from the line of Jurgen Kolb, Kepler Cheuvreux.

Two indeed. First one, coming to the brand side. You mentioned that there is obviously some overlap on the customer side, but I was wondering if you would extend that analysis to the brands? Are there a meaningful difference between Zalando and ABOUT YOU? And second one is, when it comes to systems, which on the front end, are used at ABOUT YOU, for example, or at Zalando, for example, Highsnobiety and all the background here. Is there any plan to combine these systems so that also Highsnobiety will be used or somewhat integrated into ABOUT YOU?

Yes. Thank you for your question. So I think on the brand or like of overlap, so the brand overlap from Zalando to ABOUT YOU is roughly about 30%. So -- and the other way around, it's a bit higher because ABOUT YOU has a little bit less brand than Zalando has, obviously, on the SKU levels it's even lower. But I think what it actually tells you is, I think that the different experiences are distinct and different. So it's a different shelf, a different wallet, I think that both of these experience have. And the use case is different. And therefore, we're very happy like to actually have these 2 distinct experiences now as one team in one group. When it comes to the further integrations. So as I said, like the main 3 -- the main buckets of integration of value creation is actually in payments and logistics and in B2B, and we have as well this commercial collaboration. I think here what we mean by that is mainly in terms of marketing and buying. And we see -- I think here, on the collaboration side, there are some value creation opportunities, but we don't want to like integrate these 3 experiences too much because it's a founder-led team at ABOUT YOU. We have a strong team as well as our side. And we believe that running these 2 distinct experiences separately will actually benefit as a group much more. So I think a little bit of how we think about it is as a Tour de France team. So in Tour de France, you have various different riders there, you have like the mountain rider that's very good in climbing up, and you have the speed rider that's very good in speed. And there's obviously some overlap. There's obviously some completion between players. But in the end, you win as a team and you cheer each other up as a team, you learn from each other as a team. So we will learn from them. They will learn from Zalando. And I think together, we win even better.

The next question comes from Yashraj Rajani, UBS.

Congratulations on the deal. The first question I actually had was on marketing efficiencies. You mentioned that, that is one of the key lines of the synergies. But can you describe that in a little more detail, please? Because it seems like if you are operating different experiences, both of them will come with their allocated marketing cost. Where exactly are we seeing the marketing efficiencies on the synergy side, please? And if you can quantify that, that would be really helpful. So that's the first question. The second question is more on the cash side of things. So -- I mean if I understand correctly, Zalando already had a bit of excess capacity and so did ABOUT YOU. So with both of the businesses being combined and actually using the same logistics network, are you going to get a bit of a cash uplift by mothballing some of ABOUT YOU's capacity and some of Zalando's capacity and optimizing that network? And if so, what that number is?

Yes, I think on the marketing efficiencies, as I said, like the main areas of synergies are coming from the other pieces. But I think for markets -- from commercial activities and marketing, there will be as well some quick win gains, but just, I think, like comparing more, I think the commercial calendars of how we run the marketing activities and as well of not working against each other, like bidding on each other, for example on -- and some -- yes, so those are the line of marketing efficiencies that are easy to -- the easiest collaborate between these 2 brands without interfering in independence.

And then happy to take your second question on the logistics network. So we have 13 logistics sites on the Zalando side with 4 sites available on the ABOUT YOU side. Obviously, we are now turned that into a combined network as explained. And also in the future, similar to what we've done in the past, we'll ask ourselves when to add additional warehouses and potentially also when to close down warehouses to make sure that we manage capacity appropriately. Let me make it clear, we have enough capacity to support the growth plan of both businesses. So there's no need for additional warehouse build-out in the medium term. And that obviously, makes it very easy for us to now focus on driving efficiencies and utilization in that network.

The next question comes from the line of Georgina Johanan from JPMorgan.

So from a synergy perspective, I just wanted to understand that EUR 100 million synergies number includes anything from kind of more volume and buying on a combined basis, please, particularly given that I know at your Capital Markets Day, you did call out you had lost some gross margin as a result of that as the wholesale performance in Zalando in recent years. So it'd just be good to understand if that could now be captured quickly. And if it's in that EUR 100 million already. Second question, and I'm really sorry if I missed this somewhere in the materials, but should we be sort of building in any particular sort of short-term costs associated with the integration to be that kind of technical or redundancy items or anything like that, please? And then just finally, sorry, this is so obvious, but just in terms of that CAGR that you're guiding to on revenue, the 2023 base will presumably now be the combined group, so the ABOUT YOU sort of GMV added to the Zalando's GMV as a starting point.

Yes, so within the EUR 100 million synergies, there is also the benefit of the combined buying purchase or purchasing power, given the larger scale that we now have, so that would be included in there. And as you rightly said, that is a benefit that will be realized rather sooner than in the longer term. There are short-term integration costs, especially in the initial year. Yes, so they, of course, will impact the business in the short term, but it's not a material part. And then on the CAGR for the growth, both on GMV revenue, yes, this is for the combined group, yes, so this is not now just adding and calculating the CAGR. This is for the combined group, so including ABOUT YOU, of course, in the base.

The next question comes from the line of [indiscernible].

Firstly, on marketing synergies, ABOUT YOU has in the past been particularly aggressive in the rest of Europe with its expansion, and well, it would be quite obvious to get a bit less aggressive there. Any plans there? Or will you continue with this strategy of ABOUT YOU if it was? And then -- well, regarding taxes, ABOUT YOU had sizable tax loss carryforwards. And while I wonder how much do you expect to be able to salvage and kind of hidden reserve accounting or anything like that, optimizing the tax base so that you don't have to pay basically -- well, the goodwill that you've realized in tax rate again?

Yes. So on the marketing side, not sure but you may have realized that actually, they have already turned the course on how aggressive they were steering in rest of Europe. So that has already normalized out. And on the tax loss carry forward, so we haven't assumed that we can carry forward anything. So it's basically whatever we can if you call it coverage, it's just an additional upside for us.

The last question comes from Benjamin Kohnke, Stifel.

The first would be on the B2B side, please. And as I understand it, it will also be a dual brand strategy there, i.e., you sort of leave SCAYLE as it is. And was I wondering that on SCAYLE sort of own strategic plan, I mean, my understanding is that they want to more aggressively expand in the U.S. That they also wanted to take on an investor on the SCAYLE level that would help them to drive that expansion in the United States. Is that completely off the card, do you think? Would Zalando be that player that help SCAYLE to drive business in the U.S.? And would it be a sort of precursor for Zalando to also do, I guess, more business in the United States? So that's on the SCAYLE side. And I guess, more sort of zooming out and maybe on a more strategic level. I mean, you're now running a dual brand strategy on the B2C side and also maybe here, could that be a precursor for Zalando to act more as a, I don't know, if that's the right word, but sort of fashion holding that you could add further brands to that maybe in other subcategories or so?

Yes, let me start with your question on B2B. It's great. B2B, we use ZEOS as the umbrella strategy because it's really about providing a holistic e-commerce operating system, but then we have different products and solutions, as you know. So we have logistics solutions that will be continued to be called Zalando fulfillment solutions, fulfillment by ABOUT YOU multichannel fulfillment for the customers of these services. We have Tradebyte as a leading integrator brand that serves fashion and lifestyle customers in Europe, more than 1,000 actually. And we will also continue to leverage the SCAYLE brand name, but we will make it clear that all of them belong to the ZEOS Group and to the ZEOS solution and operating system. With regards to the growth plans of SCAYLE, obviously, we also have strong growth plans for ZEOS overall, which includes the growth plans of SCAYLE now. I think you will find more color on these growth plans also when you look at the material from the recent SCAYLE Day on the corporate website of ABOUT YOU. I think it gives you a good picture of what the business looks like, why they're so attractive and what the growth prospects are. And we are obviously now being teaming up together with ABOUT YOU to deliver on these growth prospects, both in Europe and in North America.

And on your question around -- from a dual strategy, is there 3 and 4, and 4 and 5 and so on. I mean for us, I think this move now is entering into a world of dual brand strategy because we see, as we lined out a very different distinct experience at ABOUT YOU and Zalando has, broadly speaking, our proposition is -- like our strategy is about expansion into different areas of lifestyle in the future. And most of them, I think can as well happen on Zalando. And as like beauty, for example, we have a good beauty offering on Zalando. So that's our strategy. And then we see like how dual strategy will out, I think we're very excited with the prospect and then we see how it unfolds in the future.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Patrick Kofler for any closing remarks. Patrick?

Thanks everyone for joining this call today. If there are further questions, do not hesitate to contact us. We're happy to help with our answers any time. Thanks, everyone, and enjoy your Wednesday.