Now Zalando could also be hit. On March 5th it will be determined whether the online fashion retailer remains in the Dax, or not. Should its performance continue to decline, its stock could be relegated to MDax, potentially paving the way for Lufthansa's return. In the event of relegation, Zalando would follow a similar path as the food delivery service Delivery Hero and the meal kit seller HelloFresh. These three companies were celebrated as shining stars of the German startup scene years ago and crowned their rise with the leap into the Dax. Zalando in particular was expected to play a significant role in the leading German stock exchange index.

The trio is roughly the same age: Zalando was founded in 2008, Delivery Hero and HelloFresh in 2011. All three originate from the stable of the startup financier Rocket Internet, which pushed the companies to go public early but has long since divested. They operate a B2C business model, which requires significant spending on marketing to continually attract consumers to make new orders, and on logistics to deliver the goods to customers. The Covid-19 pandemic positioned them perfectly, leading to an unprecedented surge in demand and a multiplication of stock prices due to business and restaurant closures and contact restrictions. This was followed by a slowdown in growth, stagnation, and a steep decline in the stock market.

In August 2020, Delivery Hero achieved a significant milestone by entering the top tier of the stock market, succeeding the scandal-plagued company Wirecard. Despite the delivery service still being deeply in deficit at the time, it is only recently making operational progress towards profitability. This advancement is primarily based on adjusted EBITDA, which not only disregards depreciation and interest expenses but also factors such as management compensation in stock options. In September 2021, with the expansion of the Dax from 30 to 40 companies, Zalando and HelloFresh followed suit. The former Berlin Senator for Economic Affairs, Ramona Pop, spoke optimistically of a "turning point for Berlin". However, the joy was short-lived. Delivery Hero had to exit the Dax after just two years. HelloFresh managed to remain in the stock exchange Premier League for only a year. Now, the membership of the last remaining company, Zalando, hangs in the balance.

Zalando's market value has temporarily collapsed to less than 5 billion euros. While the stock was trading above 100 euros during peak times, it is currently around 20 euros. Even at the time of its IPO in 2016, the stock was worth more, at 21.50 euros. The core problem is weak profitability: The online retailer has failed to translate the economies of scale from its greatly expanded revenue base into sustainably higher margins. Zalando achieved its highest return on earnings before interest, taxes, and special factors (EBIT) of 5.9% back in 2016. In 2022, with revenue nearly three times as high, only a meagre margin of 1.8% was accomplished. By 2023, as a result of cost-cutting measures, the margin may have reached at least 3%. In addition to the ridiculously high return rates – about half of all fashion items are returned – the margin slump is mainly due to intense competition from brick-and-mortar stores, online shops of textile chains, and other online retailers like About You and, increasingly, Shein from China.

Delivery Hero and HelloFresh also face enormous competition. They do not just compete with other food platforms but also with restaurants and self-pickups, and ultimately with the entire grocery trade. Apart from the fact that Delivery Hero provides ready-to-eat meals and HelloFresh sells only the ingredients for dishes, with the customer having to cook them, the business models are similar. They are even converging because HelloFresh now also distributes ready-to-eat meals. Both stocks debuted on the stock market in 2017. They have plummeted by more than 80% compared to their peak times. HelloFresh at least still trades above its IPO price, while Delivery Hero is below it. But with such prices, a return to the Dax is out of the question.