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Investment weighs on profits for Zalando

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It was a strong start to the year for Zalando, as the fashion e-tailer saw profits rise, along with customer satisfaction.

The first quarter of the year saw an increase in business for the German e-tailer. The number of site visits for the quarter reached 479.5m, compared to 392.8 in the first quarter of 2015, while the number of active customers increased to 18.4m. A greater number of customers used Zalando via their mobile phones, with 62.3% of the website’s customers shopping with their mobiles compared to 52.6% last year.

Zalando is working to expand its fulfilment capabilities as its customer base continued to grow, with order times in Italy improving thanks to a new international satellite warehouse in Stradella. Construction on another warehouse in Lahr, Germany, is proceeding as scheduled.

Zalando also continued to expand its partner program, which allows local brands to sell their stock on the Zalando platform. 150 new partners were recruited this quarter, including Adidas and Superdry.

The etailer continues to invest in technology, having acquired Tradebyte Software GmbH in May. This new acquisition is one of Europe’s leading providers of marketplace supply-side integration solutions, and will strengthen Zalando’s infrastructure going forward.

However, all this investment weighed on Zalando’s profits, with earnings before interest and taxes falling 31% to €20.2m. Despite this, Zalando reiterated its full year goal of 20-25% revenue growth, with neutral working capital for the end of the year.

 “We are pushing ahead on multiple fronts, delivering on our long-term platform strategy and growth plan,” said Rubin Ritter, member of the Zalando Management Board. “At the same time, our core business is developing strongly and we continue to win market share.”

Published on Thursday 12 May by Philip Gallagher

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