Zalando: more profit, but lower trading volume

Zalando reported an 87 percent surge in adjusted earnings before interest and tax (adjusted EBIT) in the second quarter. On the other hand, the value of the trading volume declined by two percent to 3,7 billion euros. Because of these results, the platform expects the adjusted EBIT in 2023 to be 300 million euros to 350 million euros.

In the second quarter, profits rose 87 percent to 144.8 million euros. This is because customers buy more per order on average. As a result, handling costs are lower. Zalando’s more focused marketing also contributed. This led to a 2.7 percentage-point improvement in the adjusted EBIT margin to 5.7 percent.

Strategic initiatives to drive growth

Gross Merchandise Volume (GMV) declined 1.8 percent to 3.7 billion euros with revenue dropping 2.5 percent to 2.6 billion euros in the second quarter compared with a year ago. Lounge by Zalando grew again in the second quarter, contributing to a 16 percent increase in revenues.

According to Zalando, the business performance comes from its focus on strategic initiatives to drive growth. For example by retaining the attention of customers, like the new artificial intelligence tool for measurements, and growing the company’s logistics offering.

Zalando has deepend brand relationships.

New sports and beauty brand partnerships have strengthened Zalando’s brand portfolio, such as Lululemon and HOKA. In beauty, Zalando has deepened brand relationships. For example with brands like Lancôme, Mugler and Shiseido, now offering them in more markets.

More partners use Zalando’s fulfillment service

More partners are using the fulfillment service offering. The partner business share of Fashion Store GMV rose almost 7 percentage points and the share of items shipped by Zalando Fulfillment Solutions increased 3 percentage points in the second quarter compared with a year ago.

EBIT in 2023 expected to be 300 to 350 million euros.

Zalando is also making its full year guidance for 2023 more precise, narrowing the ranges previously forecast. Adjusted EBIT in 2023 is now expected to be 300 million euros to 350 million euros. Previously, the company had expected between 280 million euros and 350 million euros.

GMV and revenue are more likely to be in the lower half of the initial guidance ranges of 1 percent to 7 percent for GMV and -1 percent to 4 percent for revenue. In 2022 GMV was 14.8 billion euros, revenue was 10.3 billion euros and adjusted EBIT was 184.6 million euros.