Zalando Boosts Quality Assortment, Grows Lifestyle Offering, Elevates Inspiration and Wins More B2B Partners to Deliver GMV Growth and Rising Profitability in Q1

• First-quarter gross merchandise volume (GMV) rises 1.3%
• Adjusted earnings before interest and tax (adjusted EBIT) increases to 28.3 million euros in the quarter, representing a margin of 1.3%
• Business-to-Consumer (B2C) sees strongest growth from the propositions Beauty, Sports, Kids & Family as well as ‘Lounge by Zalando’
• Business-to-Business (B2B) adds more multi-channel fulfilment partners and grows revenue by 13%
• Full-year guidance for 2024 confirmed

Berlin, May 7, 2024 // Zalando delivered growth and improved profitability in the first quarter as it boosted the quality of its assortment, saw strong growth in its lifestyle offerings, made the customer experience more inspirational and added more logistics partners. The results are a validation of Zalando’s updated strategy, announced in March, to build the leading pan-European fashion and lifestyle e-commerce ecosystem around its two main growth vectors: Business-to-Consumer (B2C) and Business-to-Business (B2B).

Gross merchandise volume (GMV) rose 1.3% to 3.3 billion euros in the first quarter compared with a year ago. Revenue was 2.2 billion euros compared with 2.3 billion euros in the prior-year period. Adjusted earnings before interest and tax (adjusted EBIT) rose to 28.3 million euros in the first quarter, in line with market expectations and representing a margin of 1.3%, compared to -0.7 million euros in the prior-year period. The substantial improvement in profitability was driven by lower fulfilment costs and successful inventory management, leading to an improved gross margin.

“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. “B2C customers are showing increased interest in our quality assortment, digital tools, propositions and inspiring content. B2B customers are signing up for our unique offering. Both of our growth vectors are strong and contributing to results, demonstrating the strength of our plans.”

Within the B2C growth vector, Zalando’s first pillar is to differentiate itself through quality to offer the best possible shopping experience in fashion and lifestyle. In the first quarter, the company further elevated its assortment, for example by launching the premium sports brand ‘On’ in 22 markets. 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.

The second growth pillar of Zalando’s B2C strategy - expanding further as a lifestyle destination by elevating existing categories into distinct propositions - showed strong results in the quarter. Propositions offer a captivating experience by combining a more comprehensive assortment, advice features, personalised inspiration and seamless convenience. As part of the new, elevated Designer experience on the website and app, which offers a luxury boutique-style space for designer brands, 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.

For the third B2C growth pillar - integrating content into commerce and offering personalised inspiration and entertainment - the company added new functionality to the Zalando Assistant that allows customers to ask questions using voice instead of just text, making the experience even more intuitive and natural. A new source of inspiration, called Trend Spotter, shows customers emerging fashion trends across six major European fashion capitals. Entirely powered by Zalando’s data, it presents top items that are trending among customers in Berlin, Paris, Milan, Antwerp, Stockholm and Copenhagen every week.

GMV at B2C rose 1.3% 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% in the quarter. The improvement in profitability by 1.4 percentage points compared to the same quarter of the previous year was driven by a higher gross margin and lower fulfilment costs.

In B2B, Zalando is opening up its logistics infrastructure, software and service capabilities to be a key enabler for e-commerce transactions of brands and retailers, regardless whether they take place on or off the Zalando platform. Five more partners came on board for ZEOS multi-channel fulfilment in the first quarter bringing the total to 27 merchants.

One example of a brand that recently signed up for a more comprehensive package of services is LolaLiza. The successful Belgian womenswear brand, which has been part of the partner program since 2020, recently signed a new deal to include ZEOS fulfilment for countries outside its home market and will move to Zalando’s marketplace integrator, Tradebyte.

Revenue at the B2B growth vector increased 13% to 215 million euros and adjusted EBIT rose to 5 million euros from 4 million euros in the quarter from the year-ago period. The adjusted EBIT margin improved to 2.5% from 2.2% a year prior.

Full-year guidance confirmed

Zalando confirms its full year guidance for 2024 and expects both GMV and revenue to grow 0% to 5% this year compared to 2023. The company will continue to focus on profitable growth, with margin progression, and adjusted EBIT is expected to be between 380 million euros and 450 million euros.

The Q1 2024 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 second quarter 2024 on August 6, 2024.

Zalando at a glance

*Definitions are available in the Annual Report 2023