Zalando to Continue Strong Growth After Successful Finish to 2018

• Strong finish to 2018 in Q4: 24.6% revenue growth, 7.1% adjusted EBIT margin
• FY 2018: EUR 5.4 billion revenue, EUR 173.4 million adjusted EBIT
• Outlook 2019: 20-25% GMV growth, revenue growth at low end of range;
  EUR 175-225 million adjusted EBIT
• Zalando further refines platform strategy, targets EUR 20 billion GMV by 2023/2024
• David Schröder (CFO) and Jim Freeman (CTO) to join Management Board

BERLIN, FEBRUARY 28, 2019 // Zalando finished 2018 on a high note, growing revenues in the fourth quarter by 24.6% to EUR 1.7 billion at an adjusted EBIT of EUR 117.8 million. For the full year 2018, Europe’s leading platform for fashion and lifestyle grew revenues by 20% to EUR 5.4 billion and achieved an adjusted EBIT of EUR 173.4 million.

Growth at Zalando was fueled by 26.4 million active customers (2017: 23.1 million) placing 116.2 million orders throughout the year (2017: 90.5 million), while traffic increased to 3.1 billion visits (2017: 2.6 billion). The fourth quarter marked particularly strong growth, with close to one billion visits and 1.3 million new active customers - the highest quarterly active customer increase in five years.

Co-CEO Rubin Ritter says: “2018 had its challenges, but we focused our efforts in the fourth quarter to pull off a strong finish to the year. Our performance in the fourth quarter gives us confidence that our long-term growth plans are well on track.”

Going forward, Zalando will disclose Gross Merchandise Volume (GMV) on a quarterly basis to increase transparency over the size of its platform. GMV describes the total amount that customers spend on the Zalando platform on merchandise from both wholesale and Partner Program. In 2018, Zalando grew GMV by 21.1% to EUR 6.6 billion.

In 2019, Zalando aims to grow GMV by 20-25% and revenues at the low end of this range. Zalando expects to continue to grow profitably and achieve an adjusted EBIT of EUR 175-225 million. The company will continue to invest into logistics and technology and plans capital expenditure of around EUR 300 million.

Zalando Focuses Strategy on Becoming the Starting Point for Fashion

To ensure future growth and push its platform transition forward, the Zalando Management Board has further refined its strategy and focused the organization on one clear goal: to become the starting point for fashion, reaching EUR 20 billion GMV by 2023/2024.

Zalando aims to deepen the relationship with its customers by tailoring its offer and focusing on an even better experience for its most loyal customers. The Zalando membership program Zalando Plus is an important enabler and will be rolled out internationally, with two countries to launch in 2019.

Co-CEO Robert Gentz says: “We are convinced that our platform strategy, with a strong customer focus and clear priorities, is the right path to success. We want to double down on our efforts to be the platform that all consumers naturally gravitate to when looking for fashion.”

Zalando will continue to scale its successful Partner Program, allowing brands to sell directly to customers through the Zalando platform. In 2018 more than 250 partners integrated with the Zalando Partner Program, which accounted for about 10% of Zalando’s GMV. Zalando aims to increase this share up to 40% by 2023/2024, with Zalando Fulfillment Solutions and Zalando Marketing Services playing key roles in successfully scaling the Zalando platform.

Co-CEO David Schneider says: “We enable brands to succeed online by providing them access to European digital consumers and by giving them the opportunity to invest into growth through our services.”

Zalando Enlarges Management Board

To reach its goals, Zalando will adapt the responsibility of its three Co-CEOs and extend the Management Board to five members as of April 1, 2019.

David Schneider (Co-CEO) will continue to work closely with brand partners and lead Zalando’s fashion offer. Robert Gentz (Co-CEO) will take on marketing and sales, and continue to be responsible for human resources. Rubin Ritter (Co-CEO) will assume responsibility for strategy.

David Schröder has been with Zalando for nine years, and successfully developed and scaled Zalando’s operations. He will join the Management Board as Chief Financial Officer (CFO) and take on responsibility for finance and operations.

Jim Freeman, currently Senior Vice President Engineering, joined Zalando in April 2018 from Amazon, where he was responsible for launching, growing, and scaling Prime Video and for launching communication experiences for Alexa and Echo devices. He will join the Management Board as Chief Technology Officer (CTO), assuming responsibility for Zalando’s product and technology strategy and execution.

Lothar Lanz, Chairman of the Zalando Supervisory Board, says: “We, the Supervisory Board, are excited to welcome two high-profile experts to the Management Board with an outstanding track record in their respective fields. The revised set-up tightens the focus of each member and secures a well-rounded view of the Zalando business on the Management Board.”

Notes to Media and Capital Markets

The company will host a press conference at 09:00 CET today, which will be streamed live at corporate.zalando.com. Subsequently, Zalando will host its Capital Markets Day at 11:00 CET today, with all sessions streamed live as well. Zalandos annual report 2018 and the earnings presentation for analysts and investors is available on the Zalando Investor Relations website. Zalando will report results for the first quarter 2019 on May 2, 2019.

Zalando Group - Key Figures (In EUR Million)