Zalando Records Exceptionally Strong and Profitable Growth in Third Quarter

  • GMV growth of 29.9 percent, fueled by strong Partner Program and Zalando Lounge performance
  • Very strong adjusted EBIT margin of 6.4 percent, driven by stronger growth and one-time effect
  • Upgraded full year guidance on the back of exceptionally strong and profitable growth in third quarter
  • Zalando expands Connected Retail and invests to triple number of stores in 2021; reinforces support for partners

BERLIN, NOVEMBER 4, 2020 // Zalando SE, Europe's leading online platform for fashion and lifestyle, achieved exceptional profitable growth in the third quarter of 2020. Gross Merchandise Volume (GMV) and revenue grew by 29.9 percent and 21.6 percent to 2.5 billion and 1.8 billion euros, respectively. The strong growth was, in particular, driven by the accelerated consumer demand shift towards digital offerings in the course of the ongoing coronavirus pandemic, as well as the strong performance of Zalando’s Partner Program and Zalando Lounge.
 

In the same period Zalando achieved an adjusted EBIT of 118.2 million euros or a margin of 6.4 percent. Significantly improved cost of sales and efficiency gains in fulfillment drove profitability in the third quarter. As a result of the exceptionally strong sell-through in the spring/summer season, Zalando released inventory valuation allowances in the amount of 35 million euros, creating a positive one-time effect on profitability.


David Schröder, Chief Financial Officer, says: “As the second coronavirus wave is starting more forcefully than anticipated, we are much better prepared than earlier in the year. Our Starting Point for Fashion strategy continues to enable us to turn the accelerated consumer demand shift towards digital offerings into business opportunities for Zalando and its partners. We will continue to invest to drive strong growth beyond 2020 following our key strategic priorities: growing our active customer base, deepening customer relationships and driving our platform transition.”


As a result of its strong financial performance, Zalando raised its outlook for the 2020 financial year on October 8, 2020. The company now expects gross merchandise volume (GMV) to grow 25-27 percent, revenues to grow 20-22 percent and an adjusted EBIT of 375-425 million euros. In its outlook published on July 15, 2020, Zalando previously assumed GMV growth of 20-25 percent, revenue growth of 15-20 percent and adjusted EBIT of 250-300 million euros for the full year.

 

CONTINUED PRIORITY ON HEALTH AND SAFETY OF EMPLOYEES

 

In its response to the second coronavirus wave, Zalando’s first priority remains to protect the health and safety of its employees. Across all office and logistic sites, strict preventative measures that follow and even extend government guidelines and recommendations have been implemented. For example, measures range from home office where possible to extensive testing and contact tracing capabilities.


Robert Gentz, Co-CEO, says: “The success of Zalando rests entirely on our teams who have shown exceptional performance during an unprecedented time. To recognize this exceptional commitment and contribution, we decided to grant all 14,000 employees a one-time bonus of 500 euros.”

 

ZALANDO REMAINS COMMITTED TO BE PART OF THE SOLUTION

 

To be part of the solution to the coronavirus pandemic, Zalando reinforced its support for partners in times of uncertainty. The company will, for example, waive all commissions for partners using the Connected Retail program until the end of the first quarter 2021 and offer early pay-outs to partners to support their liquidity position.


David Schneider, Co-CEO, says: “Across Europe, a new round of lockdown restrictions has been put in place to curb the spread of Coronavirus during the commercially most relevant time of the year for many brands and retailers. More than ever it is important for us to tackle this as a team, work even closer together and come out of the pandemic stronger together.”


Especially Connected Retail has become part of the solution for many brick-and-mortar stores during the lockdowns. It has already become Europe’s largest platform for fashion stores with about 2,000 active stores connected and Zalando aims to triple the size of connected stores in 2021. As a meaningful contributor to its platform transition, Zalando expanded Connected Retail to Denmark, Finland and Norway, as of November 1, 2020. With Austria, Switzerland, France, Italy and Belgium five additional countries will follow in 2021.

Zalando Group – Key Figures (in EUR million)


 

 

Q3 2020

Q3 2019

Group GMV

2,455.9

1,891.2

percent growth

29.9%

24.3%

Group revenue

1,849.8

1,521.1

percent growth

21.6%

26.7%

Fashion Store

  1,664.3

    1,397.8

    Thereof DACH

764.4

666.7

    Thereof Rest of Europe

899.8

731.1

Offprice

    260.5

        160.4

Other

      43.2

          42.2

Reconciliation

    (118.2)

        (79.4)

Adjusted group EBIT

    118.2

            6.3

Adjusted group EBIT margin

6.4%

0.4%

Fashion Store

89.0

9.4

    Thereof DACH

70.8

40.1

    Thereof Rest of Europe

20.2

(30.7)

Offprice

28.3

3.2

Other

(3.9)

(6.4)

Reconciliation

4.8

0.1

Net working capital

(222.6)

(69.7)

Capital expenditure

(26.3)

(88.0)

Net income

58.5

(13.6)

 

Zalando Group – Key Performance Indicators


 

 

Q3 2020

Q3 2019

Change

Site visits (million)

1,268.5

    1,000.3

26.8%

Mobile visit share (% of site visits)

87.2%

84.8%

2.4pp

Active customers (million)

      35.6

          29.5

20.7%

Number of orders (million)

      44.0

          34.7

26.7%

Average orders per active customer

        4.8

            4.6

3.3%

Average basket size (LTM, EUR)

      57.2

          56.5

2.4%

 

Definitions are available in the Q3 and annual report.

 

Boiler Plate - Q3 2020 - EN

About Zalando

Zalando is Europe’s leading online platform for fashion and lifestyle. Founded in Berlin in 2008, we bring head-to-toe fashion to more than 35 million active customers in 17 markets, offering clothing, footwear, accessories, and beauty. The assortment of international brands ranges from world famous names to local labels. Our platform is a one-stop fashion destination for inspiration, innovation, and interaction. 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 goal is to become The Starting Point for Fashion and a sustainable platform with a net-positive impact for people and the planet.

MEDIA INQUIRIES

Alexander Styles
Corporate Communications
Alexander.Styles@zalando.de
+49 (0) 152 22715810

 

INVESTOR/ANALYST INQUIRIES

Patrick Kofler
Investor Relations
investor.relations@zalando.de
+49 (0)30 20968 1584