Zalando improves profitability in Q1, confirms outlook

Zalando delivered growth and improved profitability in the first quarter with gross merchandise volume (GMV) increase of 1.3 percent to 3.3 billion euros and revenues of 2.2 billion euros compared with 2.3 billion euros in the prior-year period.

Zalando said, adjusted EBIT rose to 28.3 million euros, in line with market expectations and representing a margin of 1.3 percent, compared to negative 0.7 million euros in the prior-year period driven by lower fulfilment costs and inventory management, leading to an improved gross margin.

Zalando confirms its full year guidance and expects both GMV and revenue to grow 0 to 5 percent this year and adjusted EBIT is expected to be between 380 million euros and 450 million euros.

“As we are executing our ecosystem strategy, we are excited by the positive response from customers and partners in the first quarter. We are returning to growth,” said Dr. Sandra Dembeck, Zalando CFO in a statement.

In the first quarter, the company launched the premium sports brand ‘On’ in 22 markets and to further improve the quality of its digital experience, Zalando rolled out its size-advice-with-body-measurement tool to customers in Spain, France and Italy, bringing the total to six markets. Zalando also expanded its inclusive assortment with the launch of 20 adaptive kid’s shoes styles after talking to parents of disabled children to identify their needs.

As part of the new, elevated designer experience on the website and app, the company partnered with British-Japanese musician and actor Rina Sawayama as a new ambassador for its designer offering. Zalando also launched an exclusive co-designed capsule collection called “Cinema Club” in collaboration with the Italian designer brand Aspesi. In the quarter, Zalando saw the strongest growth from its beauty, sports, kids & family as well as ‘Lounge by Zalando’ propositions.

GMV at B2C rose 1.3 percent to 3.3 billion euros in the first quarter, supported by a timely start into the spring/ summer season. Adjusted EBIT rose to 23 million euros, representing a margin of 1.1 percent in the quarter.

In B2B, five more partners came on board for Zeos multi-channel fulfilment in the first quarter bringing the total to 27 merchants. Revenue at the B2B growth vector increased 13 percent to 215 million euros and adjusted EBIT rose to 5 million euros and the adjusted EBIT margin improved to 2.5 percent.