(Bloomberg Gadfly)—Just as fashion trends often surprise, so does Zalando SE.

The German online-only fashion retailer, No. 7 in the Internet Retailer 2016 Europe 500 said in November that full-year sales growth would be toward the higher end of its 20-25% range. On Tuesday, as it reported results for the final three months of its financial year, it said the outcome is likely to be more around the middle, at about 23%.

That might seem like nit-picking: It’s still the sort of growth rate that most store-based retailers would kill for.

For the fourth quarter ended Dec. 31, Zalando reports revenue of 1.09 billion euros ($1.17 billion), up about 25% compared with 868.5 million euros during the same period in 2015. For 2016, revenue was 3.63 billion euros ($3.89 billion), up about 23% from 2.96 billion euros in 2015. Numbers reported Tuesday are preliminary; full results for the fourth quarter and 2016 will be published March 1.

Smaller rivals ASOS Plc (No. 22 in the Europe 500) and Boohoo.com Plc (No. 166) both recently upgraded their expectations for full-year sales growth, and both are projecting ranges that would put them ahead of Zalando. In comparison, its update looks distinctly disappointing.

With an already big sales base, it’s hard to keep up heady absolute rates of growth. What’s more, Zalando looks quite exposed to the trend of women falling out of love with new clothes, which is already affecting retailers from U.S. department stores to the British high street. Its European online competition still has plenty of low-hanging growth to go for.

No wonder Zalando was the worst performer on the Euro Stoxx 600 in early trading.

Even the benefit of improved guidance on margins may prove short-lived. Zalando raised its projections to a 5.6% to 6.2% range on an earnings before interest and tax basis, a slight increase from previous forecasts and a big step up from 2015’s 3.6%. The uplift reflects efficiencies it’s been able to deliver from its past spending on marketing and technology. Neither Boohoo nor Asos were able to deliver margin upgrades, despite their faster sales growth.

But as Gadfly has argued, Zalando faces competition from Amazon.com Inc. (No. 1), which is trying to build up its fashion business. This is a particular risk because Zalando sells fewer own-label garments than ASOS and Boohoo and relies more heavily on third-party brands, a similar model to that of the U.S. giant.

That means Zalando must keep investing to stay ahead of its muscular rival. Indeed, this is a challenge for all online-only retailers, as well as European store chains that are beefing up their internet-selling capabilities.

Cyber growth comes with a cost. Zalando said Tuesday that it would open a warehouse in Sweden this year. It has already opened a similar facility in France. At least it’s not avoiding these necessary expenses, but it doesn’t have much choice—ASOS said last week that it would be stepping up investment.

Zalando’s shares are up an impressive 27% over the past year. But ASOS is up 85%, while Boohoo has skyrocketed by almost 300%.

Consequently, Zalando’s forward price-to-earnings ratio trades at a discount to both. That looks justified given the more muted growth outlook, and greater exposure to the threat from Amazon. This might not be the last surprise for investors.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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