Zalando deepens customer relationships in first quarter

• Gross Merchandise Volume (GMV) of 3.2 billion euros (+1%) in the first quarter
• Strong growth in share of Partner Business, now 32% of Fashion Store GMV
• Revenue of 2.2 billion euros (-1.5% YoY), adjusted EBIT of -51.8 million euros
• Confirming full-year financial guidance for 2022 at the lower end of GMV growth, revenue growth and adjusted EBIT

BERLIN, MAY 5, 2022 // Zalando has built deeper customer relationships by driving further adoption of its loyalty program, Plus, and increasing customer engagement around its propositions in Beauty, Lounge, Designer and Pre-Owned. Zalando’s active customers increased by 5.2% in the first quarter (17% over 12 months) to nearly 49 million, and Zalando Plus memberships increased by 150% year-over-year. The Partner Business share saw strong growth in the first quarter, accounting for 32% of Fashion Store GMV. Thousands of international and local businesses now use the platform to sell more of their fashion and beauty products, meaning Zalando is well on track to reach its 2025 goal of having 50% of Fashion Store GMV generated by its Partner Business.

The first quarter was impacted by macroeconomic factors, following strong growth from last year. Rising inflation and increasing costs for households contributed to a more cautious consumer sentiment, while an eased pandemic environment prompted changes in consumer preferences. Customers are shopping for more seasonal and trend-based items, and, depending on preference, they are veering towards either high-end assortment or shifting from mid-market towards entry prices. The company’s gross merchandise volume rose slightly by 1% to 3.2 billion euros, compared to extraordinarily strong growth in the first quarter of 2021. Revenue fell by 1.5% to 2.2 billion euros, mainly due to the transition of the business to a platform model. Zalando reported an adjusted EBIT of -51.8 million euros, corresponding to a margin of -2.4%, mainly due to reduced gross margin as a result of more promotional activities to attract customers and increased fulfillment costs.

Robert Gentz, Zalando Co-CEO, said: “Our business fundamentals are strong, and we are taking steps to improve our results. We are managing Zalando for the long term and have always used our business agility and adaptability to successfully respond to short-term challenges and consumer demand to emerge better and stronger. We remain confident that we will achieve our ambition to reach more than 30 billion euros GMV by 2025.”

Despite a challenging quarter, the company made substantial progress to deepen customer relationships and transform the business to a platform model. Customer engagement continues to grow as more customers visit Zalando more often and engage more frequently with Zalando’s increasing range of propositions. Similarly, Zalando’s platform services saw strong engagement as partners continued to leverage Zalando Marketing Services to increase their visibility on the platform and drive sales.

While macroeconomic uncertainty continues, Zalando is managing its short-term challenges by 1) refining its offering to adjust to the changing spending patterns of its customers, 2) improving order economics and implementing cost efficient solutions, and 3) continuing to invest to provide best in-class customer experience, partner services and e-commerce capabilities. 

“We are flexible and well-equipped to steer Zalando through this volatile market environment. This includes making the necessary adjustments to improve our performance,” said Dr. Sandra Dembeck, Zalando CFO. “At the same time we are continuing to invest through the cycle to drive long term value. We are expanding our logistics network and advancing our platform to better serve our customers and partners, enable sustainable future growth and set us up for long-term success.”

In order to offer customers faster delivery times, Zalando is adding more fulfillment centers to further strengthen its logistics network. Construction has already begun in Frankfurt, Germany and Bydgoszcz, Poland, and, most recently, in the Paris region in France. Also, following successful market launches in six countries in 2021, Zalando will be launching in two new markets, Hungary and Romania, in May.

FINANCIAL GUIDANCE

Zalando confirms its full year 2022 guidance at the lower end of GMV growth of 16-23% and lower end of revenue growth of 12-19%. Zalando expects to achieve an adjusted EBIT at the lower end of 430-510 million euros and capital expenditure between 400-500 million euros.

The Q1 2022 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 2022 on August 4, 2022.

Definitions are available in the Quarterly Report