Zalando posts 22% growth in Q1 but marks 15 million-euro losses

Zalando starts fiscal 2018 with mixed performance. The German ecommerce fashion group reported a 22% growth in sales during the first quarter of 2018, but earnings were pressured by continued investments and a late start of the spring-summer season. The company posted losses of 15 million euros, compared to 5.1 million-euro profits in the same period of the previous year.

Rubin Ritter, co-CEO of Zalando, said in a statement that the delay in the start of the spring-summer campaign “put pressure on the industry”, adding that “our top priority is growth and that is exactly what we have focused on the first quarter.”

Zalando’s turnover reached 1,196 million euros in the first three months of the year. On January 1, the group reorganized its internal management structure, arranging it by sales channels instead of geographic regions.

Zalando’s sales reached 1,196 million euros in the first quarter

The key sales channel for Zalando is its Fashion Store (Zalando’s online shops), followed by outlets (Zalando Lounge, outlets and others), the zLabels offering and other emerging businesses.

The company only segregates the turnover of the Fashion Store division, which amounted to 1,093.9 million euros in the first quarter. By markets, Germany, Austria and Switzerland accounted for about half of sales, with revenues of 552 million euros, up 16.2%. In the rest of Europe, Zalando achieved a turnover of 541.9 million euros, up 24.9%.

The group has also altered the way of reporting its results: while reporting was previously on a consolidated basis, from January 1, 2018 onwards, revenue and profitability generated with external business partners as well as the internal transactions between segments of Zalando will be reported.

The company generates half of its sales in Germany, Austria and Switzerland, although it registered double-digit growth in the rest of Europe

During the first quarter, Zalando stepped into cosmetics with more than 4,000 references of 130 brands. This is the first category that Zalando launched in four years and the kick-off has been “promising” in terms of sales, according to Ritter.

The group registered 23.9 million active buyers in the period, 16.7% more than in the first quarter of 2017, and each one made four orders on average in the last twelve months, a historical record for Zalando. Platform visits from mobile devices reached 76.6% of total.

Despite the downward evolution of its net result for the period, the group keeps intact its full-year forecast, which estimates a growth rate ranging from 20% to 25% and an ebit between 220 million and 270 million euros.