Zalando SE: Zalando launches new brands and AI-powered size recommendations for customers in Q2, progressing on its strategy to be the Starting Point for Fashion

Zalando launches new brands and AI-powered size recommendations for customers in Q2, progressing on its strategy to be the Starting Point for Fashion

• Second-quarter adjusted EBIT grows 87% to 144.8 million euros compared with a year ago; GMV and revenue decline slightly
• New brand launches such as lululemon add value for customers
• More partners use Zalando’s fulfillment service offering to scale their businesses
• Zalando unlocks potential of tech innovation, helping customers to find the right size and fit
• Full-year guidance more precise with ranges narrowed: Adjusted EBIT upgraded slightly to 300 million to 350 million euros; GMV and revenue expected in lower half

Berlin, August 3, 2023 // Zalando, a leading European e-Commerce destination for fashion and lifestyle, reported an 87 percent surge in adjusted earnings before interest and tax (adjusted EBIT) in the second quarter. The solid business performance comes amid a focus on strategic initiatives to boost growth such as earning and retaining the attention of customers and growing the company’s logistics offering.

New sports and beauty brand partnerships have strengthened Zalando’s brand portfolio and sparked customer excitement in the quarter. lululemon, which offers innovative apparel and accessories for yoga, running, training and most other sports activities, launched on Zalando, as did HOKA, a brand for innovative and high-performance running gear. In beauty, Zalando has deepened important brand relationships, for example, with luxury brands like Lancôme, Mugler and Shiseido, now offering them in more markets.

Partners continue to grow their businesses on Zalando and more are choosing to use the fulfillment service offering. The partner business share of Fashion Store GMV rose almost 7 percentage points and the share of items shipped by Zalando Fulfillment Solutions increased 3 percentage points in the second quarter compared with a year ago. 

A new artificial-intelligence tool launched last month enables customers in Germany, Austria and Switzerland to receive size recommendations for select garments, based on their unique body measurements. By taking two pictures of themselves with their phones in tight clothing, Zalando is able to predict the customer’s body measurements to help them find the right size.

“We are investing in areas such as storytelling and technology that will boost future growth,” said Robert Gentz, Co-CEO of Zalando. “New brands such as lululemon and Lancôme will excite our customers and help make Zalando even more a destination of choice. Our new size and fit tool will make the shopping experience even better. This tool is a step change solution in the industry that will help customers find the perfect fit before delivery. This is truly exciting as it shows how one of the core challenges in fashion e-commerce can be solved at scale.”

In the second quarter, Zalando’s profit almost doubled with adjusted EBIT gaining 87% to 144.8 million euros compared with a year ago. Profitability was boosted by better order economics amid bigger average basket sizes resulting in lower fulfillment costs. Zalando’s more focused marketing also contributed. In combination, this led to a 2.7 percentage-point improvement in the adjusted EBIT margin to 5.7%.

Gross Merchandise Volume (GMV) declined 1.8% to 3.7 billion euros in a challenging environment with revenue dropping 2.5% to 2.6 billion euros in the second quarter compared with a year ago. Lounge by Zalando, an online shopping club that offers customers limited-time offers and discounts on premium brands and which makes up a major component of the Offprice segment, grew again in the second quarter, contributing to a 16% increase in revenues at Offprice.

“Amid the temporarily challenging retail environment, we continue to drive sustainable efficiencies in fulfillment and marketing,” said Dr. Sandra Dembeck, Zalando CFO. “These efforts have paid off this year with adjusted EBIT almost doubling in the second quarter. Such success puts us in pole position to shift our focus more towards investment and future growth initiatives.”

Zalando is also making its full year guidance for 2023 more precise, narrowing the ranges previously forecast. Adjusted EBIT in 2023 is now expected to be 300 million euros to 350 million euros. Previously, the company had expected between 280 million euros and 350 million euros. GMV and revenue are more likely to be in the lower half of the initial guidance ranges of 1% to 7% for GMV and -1% to 4% for revenue. In 2022 GMV was  14.8 billion euros, revenue was 10.3 billion euros and adjusted EBIT was 184.6 million euros.

The Q2 2023 financial report, as well as the earnings presentation for analysts and investors, is available on the Zalando Investor Relations website. Zalando will report the results for the third quarter 2023 on November 2, 2023.

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Zalando at a glance

Key figures     IN EUR M Q2/23 Q2/22 Group GMV 3,718.1 3,787.1 Percent growth  -1.8 %  0.2 % Group revenue 2,556.3 2,623.0 Percent growth  -2.5 %  -4.0 % Fashion Store revenue 2,090.9 2,229.0*    Thereof DACH 938.5 1,009.7*    Thereof Rest of Europe 1,152.4 1,219.4* Offprice revenue 436.4 376.2 Other revenue 97.1 81.9 Reconciliation revenue -68.1 -64.1* Adjusted group EBIT 144.8 77.4 Adjusted group EBIT margin  5.7 %  3.0 % Fashion Store adjusted EBIT 110.6 61.0    Thereof DACH 81.2 52.4    Thereof Rest of Europe 29.4 8.6 Offprice adjusted EBIT 25.4 9.5 Other adjusted EBIT 7.7 7.6 Reconciliation adjusted EBIT 1.1 -0.6 Net working capital -114.2 206.6 Capital expenditure -39.2 -74.5 Net income 56.6 14.0

 

	Q2/23	Q2/22
Key performance indicators
Active customers (million) (last 12 months)	50.5	49.3
Number of orders (million)	63.2	67.8
Average orders per active customer (last 12 months)	5.0	5.2
Average basket size (EUR) (last 12 months)	58.1	55.9

Definitions are available in the Annual Report 2022

* Prior year figures adjusted, please check Half-Year Report 2023 (chapter Results by segment) for more information.

 

About Zalando

Zalando (https://corporate.zalando.com) is a leading European E-Commerce destination for fashion and lifestyle. Founded in Berlin in 2008, we bring head-to-toe fashion to over 50 million active customers in 25 markets, offering clothing, footwear, accessories, and beauty. The assortment of international brands ranges from world-famous names to local labels. Zalando offers a one-stop fashion experience of inspiration, innovation, interaction and shopping. As Europe’s most fashionable tech company, we work hard to find digital solutions for every aspect of the fashion journey: for our customers, partners and every valuable player in the Zalando story. Our vision is to be the Starting Point for Fashion with a net-positive impact for people and the planet.

 

Contact

Media inquiries
Sheenagh Matthews
Business & Financial Communications
corporate_fincom@zalando.de
+49 (0) 151 5143 5093

Investor/Analyst inquiries
Patrick Kofler
Investor Relations
patrick.kofler@zalando.de
+49 (0)30 20968 1584