Germany's financial regulator, BaFin, has concluded its investigation into online fashion retailer Zalando's 2025 financial report, determining that the company did not commit any significant accounting violations. The probe, initiated last month, focused on whether Zalando adequately disclosed a related party transaction involving its acquisition of About You, where Danish billionaire and major Zalando shareholder Anders Holch Povlsen also held a stake.
BaFin confirmed its findings on Monday, stating that based on its review, it would not impose any fines on Zalando. This resolution comes after Zalando had initially seen its shares plunge by as much as 20% in premarket trading on Friday when news of the probe first broke, before recovering slightly to close down around 9% on the Xetra exchange.
Following the regulator's decision, Zalando's stock rebounded significantly, with shares climbing by 3.4% to $25.04 in early trading on Monday. Analysts like Andrew Ross at Barclays had previously noted that while the initial news created an "unhelpful headline" and an "overhang" for the stock, the issue was likely solvable, as Zalando had maintained it was a "purely formal issue" with no impact on its financial KPIs or performance. The company had stated that all relevant information on the deal had been publicly disclosed as part of the takeover offer document, though not explicitly in its annual report's footnotes.
Zalando had asserted its cooperation with BaFin throughout the review, emphasizing the immaterial nature of the alleged disclosure oversight. This outcome aligns with analysts' expectations, such as Monique Pollard from Citi, who had anticipated that BaFin, despite its power to issue fines, would not levy a material penalty given prior public disclosures. The conclusion of the probe removes the regulatory uncertainty that had weighed on Zalando's shares since the announcement of the investigation.
