Zalando quarterly profits jump to €80.9 million

Zalando, Europe's biggest pure online fashion retailer, reported a big jump in second-quarter profitability in its core business in Germany, Austria and Switzerland as investments in logistics and marketing paid off.

Zalando said second-quarter adjusted earnings before interest and taxation (EBIT) almost tripled to €80.9 million on revenue up 25 per cent to €916 million.

Revenue growth slowed in Germany, Austria and Switzerland to 14.7 per cent from 32.5 per cent a year ago, but the adjusted EBIT margin for the region quadrupled to 13.9 per cent, while it was a steady 4.1 per cent for the rest of its business.

The fashion platform opened a research and development centre in Dublin last year.

Zalando said the main driver behind the jump in profitability was strong operating leverage that compensated from big investments in technology, logistics and marketing.

Zalando’s shares had come under pressure this year as investors expressed fears it is more exposed to Amazon’s foray into fashion than British rival ASOS, but they jumped last month when it reported strong preliminary figures.

Zalando had also raised its guidance for the full year adjusted EBIT margin to 4.0-5.5 per cent from 3.0 to 4.5 per cent and reiterated a forecast for full-year sales to grow at the upper end of a 20 to 25 per cent range.

ASOS and smaller British online fashion retailer Boohoo. com have both raised their full-year sales growth forecasts due to robust demand through the summer and spring.

Zalando said the number of active customers grew to a record 18.8 million by the end of the quarter, with each active customer making an average of 3.3 orders per year.

Reuters