Zalando delivers growth and improved profitability as more customers buy through shopping club and partner business share increases

• First-quarter gross merchandise volume grows 2.8%, revenue gains 2.3%
• Company breaks even at adjusted EBIT level versus -52 million euros a year ago
• Offprice segment successfully captures customer demand with 33% sales growth
• Partner GMV share grows to 39% of Fashion Store, showing progress of platform strategy
• Full-year 2023 guidance confirmed

Berlin, May 4, 2023 // Zalando, one of Europe’s leading online platforms for fashion and lifestyle, delivered growth and improved profitability in the first quarter, helped by rising demand at its online shopping club Lounge by Zalando and partners selling more fashion and beauty products on the company's platform.

Gross merchandise volume (GMV) rose 2.8% to 3.2 billion euros and revenue increased 2.3% to 2.3 billion euros in the first quarter compared with a year ago. The company broke even at an adjusted earnings before interest and tax (adjusted EBIT) level compared with -52 million euros in the first quarter a year ago. The number of active customers grew 4.8% versus last year to 51.2 million.

Zalando’s growth comes amid a continued challenging economic environment with high inflation. Against this backdrop, the company’s focus on improving profitability is paying off. Better order economics, primarily bigger basket sizes as customer spending remains resilient, led to lower fulfillment costs and a significant improvement in adjusted EBIT. The focus on profitable growth means the company is on track to meet its full-year guidance.

“The first quarter demonstrated how flexible our business model is, enabling us to perform in a challenging market environment as we saw strong customer demand at our Offprice segment and a strong performance of the partner business,” said Robert Gentz, Co-CEO of Zalando. “Curated product drops with brands such as Adidas and Salomon or teaming up with designer brands to create capsule collections led to increased engagement with our customers. These exclusive and limited-edition products keep our customers coming back more regularly.”

In April, Zalando and Paco Rabanne launched a Spring/Summer’23 capsule collection, exclusively available on Zalando. The 40-piece collection embodies the iconic design of Paco Rabanne and is part of Zalando’s ambition to create an inspirational shopping experience for the new generation of designer and luxury consumers.

Lounge by Zalando, an online shopping club that offers customers limited-time offers and discounts on premium brands and which makes up a major component of the Offprice segment, grew particularly strongly in the first quarter, contributing to a 33% increase in revenues at Offprice. The enhanced on-site customer experience and new brand identity introduced in January drew positive reactions from users interacting with the Lounge by Zalando app.

Zalando took another step in advancing its platform strategy as it helps partners sell more of their fashion and beauty products. The proportion of partners contributing to Fashion Store GMV was 39%, up 8 percentage points compared with a year ago, meaning Zalando has made progress towards its 50% partner business share target.

“Our focus on profitable growth is working and delivering results,” said Dr. Sandra Dembeck, Zalando CFO. “As overall demand remains muted, we continue our focus on driving sustainable efficiencies in fulfillment and marketing. At the same time, we are continuing to invest selectively through the cycle into new growth opportunities, ready to capture demand when the market rebounds. For example, we have invested in our fashion discovery experience, where we present brands and assortment to customers through storytelling, as well as our Multi-Channel Fulfillment.”

Multi-Channel Fulfillment is an initiative that Zalando launched a pilot of in October. The company is productizing its e-commerce infrastructure in order to enable other businesses across Europe, extending its logistics solutions for brands selling via other platforms as well as through their own online shops.

Zalando confirms its full year guidance for 2023. GMV is expected to grow between 1% and 7%. Revenue is expected to develop in the range of -1% to 4% compared with last year. Zalando will continue its focus on profitable growth delivering margin progression while continuing to invest through the cycle for future growth. It expects adjusted EBIT to be between 280 million euros and 350 million euros this year.

The Q1 2023 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 2023 on August 3, 2023.

* Prior year figures adjusted, please check Quarterly Statement Q1 2023  (chapter Results by segment) for more information.

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