Zalando quarterly revenue surges amid drop in profits

// Zalando announces “strong finish” to 2018
// Revenues in the fourth quarter surged 24.6 per cent to €1.7bn (£1.4bn)
// 34.1m orders placed in the fourth quarter, compared to 25.8m orders in 2017

Zalando has had a “strong finish” to 2018 with climbing revenues in the fourth quarter, although its full-year operating earnings dropped by €40 million due investment schemes.

The German online retailer’s revenues in the fourth quarter surged 24.6 per cent to €1.7 billion (£1.4 billion) while adjusted EBIT for the quarter grew to €117.8 million (£100 million).

However, for its full-year period last year, adjusted group EBIT dropped from €215.1 million in 2017 to €173.4 million (£148.9 million) in 2018.

Sales for the year grew 20 per cent year-on-year to €5.3 billion (£4.5 billion), but this was a slight slowdown on the 23.4 per cent annual growth recorded in 2017.

Nonetheless, Zalando’s fourth quarter saw strong growth with up to one billion visits to the website and 1.3 million new active customers, making it the highest quarterly active customer increase in five years.

The company recorded 34.1 million orders in its fourth quarter, compared to 25.8 million orders in the same period in the previous year.

“2018 had its challenges, but we focused our efforts in the fourth quarter to pull off a strong finish to the year,” Zalando co-chief executive Rubin Ritter said.

“Our performance in the fourth quarter gives us confidence that our long-term growth plans are well on track.”

For the full year, its fashion and lifestyle platform revenue grew by 20 per cent to €5.4 billion (£4.6 billion) and achieved an adjusted EBIT of €173.4 million (£148.6 million).

Meanwhile, Zalando’s growth was bolstered by 26.4 million active customers compared to 23.1 million customers in 2017.

A total of 116.2 million orders were placed, compared to 90.5 million in 2017 while traffic increased to 3.1 billion compared to the 2.6 billion in the previous year.

Mobile visits to the website increased by 79.3 per cent, compared to the 70.7 per cent in the previous year.

The retailer’s gross merchandise volume (GMV) climbed by 21.1 per cent to €6.6 billion £5.6 billion.

Zalando is aiming for its GMV to increase by 20 to 25 per cent this year, and expects to see profits increase, as well as achieve an adjusted EBIT of €175-225 million (£149-192 million).

The company plans capital expenditure of around €300 million (£256 million) and will continue to invest in logistics and technology to further improve its business.

Meanwhile, Zalando aims to connect with its customers by offering a tailored experience.

As well as a loyalty program, the company will also adapt the responsibility of its three co-chief executives and extend the management board to five members as of April 1.

Co-chief executive David Schneider will continue working closely with brand partners, while co-chief executive Robert Gentz will lead the marketing and sales team as well as human resources, and Ritter will be responsible for strategy.

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