Zalando breaks even as demand for its online shopping club soars

German online fashion giant Zalando has reported 2.3% revenue gains to €‎2.3 billion for the first quarter as partners flock to its platform.

The firm broke even at an adjusted earnings before interest and tax level compared with a loss of €52m (£45.8m) in the first quarter a year ago.

The number of active customers also grew 4.8% to 51.2 million.

The growth is attributed to the retailer’s offprice segment and its online shopping club providing limited-time offers and discounts on premium brands, with a 33% revenue increase. The results were elevated by enhanced on-site customer experience and new brand identity introduced in January.

“The first quarter demonstrated how flexible our business model is, enabling us to perform in a challenging market environment as we saw strong customer demand at our Offprice segment and a strong performance of the partner business,” said Robert Gentz, co-CEO of Zalando.

“Curated product drops with brands such as Adidas and Salomon or teaming up with designer brands to create capsule collections led to increased engagement with our customers. These exclusive and limited-edition products keep our customers coming back more regularly.”

Zalando has also advanced its platform strategy to help partners sell more of their fashion and beauty products, with the proportion of contributing partners up 8% from the year before.

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Zalando had previously said it will switch its focus to improving on profitability this year after its profits slumped and sales stagnated.

Overall, the firm said its adjusted focus against “challenging economic environment with high inflation” is “paying off”.

“Our focus on profitable growth is working and delivering results,” said Dr. Sandra Dembeck, Zalando CFO. “As overall demand remains muted, we continue our focus on driving sustainable efficiencies in fulfillment and marketing.

“At the same time, we are continuing to invest selectively through the cycle into new growth opportunities, ready to capture demand when the market rebounds. For example, we have invested in our fashion discovery experience, where we present brands and assortment to customers through storytelling, as well as our Multi-Channel Fulfillment.”

In its full-year guidance, Zalando expects revenues to develop in the range of -1% to 4% compared with last year while GMV is expected to grow between 1% and 7%. The retailer expects adjusted EBIT to be between €280 million and €350 million euros this year.



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