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Zalando (XTRA:ZAL) Could Be 36% Undervalued After Its AI Returns Push

Simply Wall St · 2d ago

Zalando (XTRA:ZAL) is back in focus after teaming up with Sereact and CEVA Logistics to roll out AI powered robotic returns handling in German and Polish fulfillment centers.

These robotics and AI moves land at a tricky moment for Zalando. The 1-year total shareholder return is down 19.43%, the 5-year total shareholder return has fallen about 70%, and the share price has slipped 16.6% over the past three months to €22.56, which points to fading momentum even as management leans into automation and events like the planned 2027 Access All Areas festival in Berlin to reset the story.

Scan beyond Zalando and see how other AI and automation plays in retail are lining up with our curated 88 robotics and automation stocks for this theme.

Bulls highlight €13.5b of sales, new AI automation initiatives and a broad fashion platform that appears undervalued. Bears focus on weak recent returns and execution risk. Which side do current valuation markers appear to support?

Most Popular Narrative: 36% Undervalued

The most followed narrative currently places Zalando's fair value at €35.36, well above the last close at €22.56. This puts the spotlight on whether its AI and logistics bets can eventually justify that gap.

The acquisition and integration of ABOUT YOU, along with synergy realization in logistics, B2B/B2C cross-selling, and payments, should yield significant cost efficiencies and scale benefits from 2026-2029, improving net margins and group earnings.

Rapid growth and expansion of the Partner Program (marketplace model), including Shopify partnerships and increased brand participation, is shifting revenue mix toward higher-margin commission and service revenues, structurally supporting increases in net margins and EBIT.

See why 61 investors see Zalando as 36% undervalued.

Result: Fair Value of €35.36 (UNDERVALUED)

Still, muted European demand and intense competition from platforms like Amazon and Shein could pressure Zalando's margins and challenge the bullish AI and logistics narrative.

Find out about the key risks to this Zalando narrative.

Another View: Multiples Paint A Tougher Picture For Zalando

The SWS fair value puts Zalando at €35.36, which looks attractive next to the current €22.56 share price. Price based ratios tell a different story. The P/E of 57.4x is far above the European Specialty Retail average of 15.1x, the peer average of 21.6x, and the fair ratio of 21.8x.

That gap implies investors are already paying up heavily for future earnings improvement, which reduces the margin of safety if the AI and returns automation story stalls. Is the discount to fair value enough to offset this valuation stretch?

See what the numbers say about this price — find out in our valuation breakdown.

XTRA:ZAL P/E Ratio as at Oct 2026
XTRA:ZAL P/E Ratio as at Oct 2026

Next Steps

Mixed signals on Zalando's story so far. If you think time matters here, pressure test the numbers yourself and weigh both sides using 2 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Zalando?

If Zalando’s mixed signals have you thinking about diversification, use this moment. Fresh watchlist additions today could matter more than tinkering at the edges later.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.