Zalando invests into inspiration, logistics and technology to boost future growth amid an increase in third quarter earnings

Adjusted EBIT rises to 23.2 million euros from 13.5 million euros in third quarter; GMV declines 2.4%; revenue falls 3.2% Launch of ‘Stories on Zalando’ creates a new fashion-inspiration experience New luxury boutique-style space in Fashion Store to improve experience for designer brands and customers New B2B brand ZEOS enables brands and retailers to manage their multi-channel business across Europe within one unified platform Zalando confirms full-year guidance for adjusted EBIT, revising outlook for GMV and revenue on expectation of continued pressure on demand for the rest of the year

Zalando, a leading European e-Commerce destination for fashion and lifestyle, has reported adjusted third-quarter earnings before interest and tax (adjusted EBIT) of 23.2 million euros, an increase of 72% compared with last year. At the same time, it is confirming the full-year guidance for adjusted EBIT but revising it for gross merchandise volume (GMV) and revenue on expectation of continued pressure on demand for the rest of the year. The company is laying further foundations for future growth with strategic initiatives such as inspiring customers with new content and storytelling formats, introducing a luxury boutique-style space in Fashion Store to improve the experience for designer brands and customers and growing the company’s logistics offering.

Introduced in September, ‘Stories on Zalando’ is a new inspiration experience, created in collaboration with Highsnobiety, the influential global fashion and lifestyle media brand that Zalando acquired a majority stake in last year. Stories on Zalando offer customers curated content in visual-first formats like short videos, a new way of discovering fashion and culture trends.

Zalando has started rolling out a new luxury boutique-style space for designer brands in Fashion Store, with a new and different look and feel. This update will make Zalando more attractive to luxury brands, giving them more control over how they appear on the platform and over their brand equity. The space will invite the new generation of luxury customers to discover a fresh, differentiated and inspirational designer shopping experience.

Last month, the company launched the B2B brand ZEOS, short for Zalando E-commerce Operating System, enabling fashion and lifestyle brands and retailers to manage their multi-channel business across Europe within one unified platform. Last year, Zalando successfully piloted multi-channel fulfillment, which is moving under the new brand and is now called ZEOS Fulfillment. Around 30 brands and retailers such as Pepe Jeans, a brand of AWWG Group, and renowned Polish shoes and accessories brand Kazar are already working with the new offering.

“Storytelling, logistics and technology are key to boost our future growth. Our healthy balance sheet gives us the financial flexibility to make these strategic investments,” said Dr. Sandra Dembeck, Zalando CFO. “On top of that, our financial discipline meant that we were able to deliver on another quarter of improved profitability.”

Adjusted EBIT increased to 23.2 million euros in the third quarter from 13.5 million euros in the same quarter a year ago, boosted by lower fulfillment costs. Adjusted EBIT as a percentage of sales rose to 1% in the quarter from 0.6% compared with a year ago. GMV declined 2.4% to 3.2 billion euros and revenue fell 3.2% to 2.3 billion euros in the quarter amid a challenging macroeconomic environment of low consumer sentiment and declining online sales. The quarter was also adversely impacted by the warmest September on record in Europe, as shoppers did not buy autumn and winter apparel as they usually do in this season.

Zalando took another step in advancing its platform strategy as it helps partners sell more of their fashion and beauty products. The proportion of partners contributing to Fashion Store GMV was 39%, up 4 percentage points compared with a year ago.
Full-year guidance 2023

Zalando is confirming its full-year guidance for adjusted EBIT and adjusting its guidance for GMV and revenue. Adjusted EBIT is still expected to be 300 million euros to 350 million euros in 2023. GMV is now expected to develop between -2% and 1% and revenue to develop between -3% and -0.5% in 2023. Previously, the company had expected GMV and revenue to come in at the lower half of the guidance ranges of 1% to 7% for GMV and -1% to 4% for revenue. In comparison, in 2022 GMV was 14.8 billion euros, revenue was 10.3 billion euros and adjusted EBIT was 184.6 million euros.

The third-quarter 2023 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 full year 2023 on March 13, 2024.