Zalando Grows Net Sales by 600 Million EUR in 2013

• Net sales increased by more than 50 per cent to 1.8billion EUR
• Zalando gained market share in all key markets
• Core region DACH exceeded 1 billion EUR in net sales, remained break even
• Slightly improved EBIT margin in spite of adverse weather and continued investments in logistics and technology
• Successful transition to mobile era with over 35% of visits via smartphone or tablet at year-end

BERLIN, FEBRUARY 14, 2014 // Zalando, Europe’s leading online shop for fashion, grew net sales in 2013 by about 600 million EUR or over 50 per cent to 1.8 billion EUR, according to the company’s preliminary figures. The growth was driven by the successful expansion of the existing shoe and apparel categories in the core markets, as well as strong developments in the seven new markets Zalando entered in 2012.

In 2013, Zalando continued to outpace market growth and gained market share in all regional markets. In the core region DACH (Germany, Austria, and Switzerland), Zalando continued to perform strongly and reached more than one billion EUR in net sales for the first time. All international regions showed high double-digit net sales growth. Especially the seven new markets established in the summer of 2012 developed well and pushed sales growth to over 70 per cent in the first half-year of 2013, compared to the same period in 2012. “2013 was another strong year for us and underlined our leading position in Europe’s fashion e-commerce,” said Robert Gentz, Member of the Management Board of Zalando.

With more than 300 million shop visits in the fourth quarter of 2013, Zalando successfully established itself as Europe’s most visited fashion site.

Challenging overall fashion market due to late summer and mild winter 
While the fast trend towards online shopping continued, the fashion industry in continental Europe overall faced challenging market conditions in 2013, caused by a late start of the summer and a mild winter. This lead to high discount levels in the market, putting pressure on margins. "2013 was a tough year for fashion retailers in continental Europe. The difficult weather resulted in higher discounts for fashion overall,” said David Schneider, Member of the Management Board.

The diversification from Zalando’s first category footwear to other fashion categories including clothing, sportswear and accessories continued, and for the first time in the company’s history, Zalando sold more apparel than shoes during its fiscal year 2013. Zalando’s customer base continued to grow strongly, and ended the year at over 13 million total active customers that have shopped at Zalando at least once during the past 12 months, as compared to over 9 million in 2012.

Slightly improved margins in spite of adverse weather and continued investments as the basis for future growth 
The EBIT margin improved by around 0.5 percentage points from minus 7.2% in 2012. The margin development was impacted mainly by two effects: Firstly, Zalando faced challenging weather conditions in 2013. This lead to high discount levels in the market, putting pressure on margins. Secondly, the company decided to continue strategic initiatives in 2013 as the basis for continued future growth and improved customer experience, which led to ramp-up costs in areas such as fulfilment and technology. For example, total warehouse capacity more than doubled during 2013. The first self-designed fulfilment center in Erfurt is now operational and the extension units are expected to be finished in 2014, making Erfurt the largest e-commerce facility in Europe. Operations at the new fulfillment center in Mönchengladbach have started to ramp up, and Zalando decided to invest in an extension of this facility in 2014. 
In its core region DACH, Zalando continued to achieve EBIT break-even for the financial year 2013, combined with continued strong growth. Zalando maintained outstanding levels of convenience for customers, offering free deliveries and attractive return policies. The average return rate remained stable at approximately 50 percent. “While the higher discounts put pressure on margins, we continued investing to satisfy our customers, while ensuring we have the right infrastructure in place for future growth,” said Rubin Ritter, Member of the Management Board of Zalando.

Zalando is well capitalized to fund future growth with a net cash position of over 350 million EUR at year-end 2013. In addition, Zalando added leading international investors such as the Ontario Teacher’s Pension Plan’s (OTPP) and Anders Holch Povlsen to its shareholders in 2013.

Setting up strong corporate governance 
To equip itself with a Corporate Governance structure suitable for its international footprint and future growth, Zalando in December changed its legal form to a private German stock corporation (“Aktiengesellschaft” or “AG”). Cristina Stenbeck, Executive Chairman of the Board of Directors of Investment AB Kinnevik, will be appointed as Chairperson of the Supervisory Board of Zalando. Lothar Lanz, Chief Financial Officer of Axel Springer SE, has been appointed to the Supervisory Board of Zalando AG and will act as Chairperson of the Audit Committee.

Zalando embraces push towards mobile
Zalando strives to offer customers the best online fashion experience. With a 400 plus members technology team, Zalando now manages to operate almost all processes from onsite over payment to fulfillment in-house. To further strengthen its leadership position in a fast changing online environment, Zalando actively manages the transition to the growing mobile usage of its customers. Mobile-enabled shops are now available in all 15 markets, and German apps have been released for Android and iOS devices. At year-end 2013, over 35% of the traffic in Zalando shops came from mobile devices, including tablets.

Table 1: Zalando Group - Net Sales Development

Note: Provided 2013 financials are preliminary, unaudited figures. 

*) DACH region is comprised of Germany, Austria, and Switzerland. 
**) Launch of Zalando Luxembourg in November 2013 operated through Zalando Belgium shop

ABOUT ZALANDO
Zalando is Europe’s leading online retailer for shoes and fashion. Their extensive selection for women, men and children ranges from popular high street brands to much sought-after designer labels from over 1,500 different international brands. Exclusive accessories, beauty essentials and sportswear make up Zalando’s wide range of products. A combination of unique services: free delivery and returns, a free service hotline and a 30 day returns policy make online shopping at Zalando an easy and secure shopping experience. With their own fashion blog, Facebook and Twitter accounts, Zalando provides customers with current fashion trends, product updates and news about the company. The company was founded in 2008 by Robert Gentz and David Schneider, and its headquarters are located in Berlin. Following on from its success in the German market, Zalando launched in Austria in 2009 and the Netherlands and France in 2010. Expansion to Italy, Great Britain and Switzerland followed in 2011, along with Sweden, Belgium, Spain, Denmark, Finland, Poland and Norway in 2012 and Luxembourg in 2013.