In the second quarter of this year, Zalando worked to make its fashion offer more attractive. A vision that paid off as the European online fashion platform posted an 87 percent increase in earnings before interest and tax (EBIT) during the second quarter to 144.8 million euros.
For Zalando, this profitability is the result of several initiatives launched in recent months, including more targeted marketing and larger average shopping baskets, which have reduced execution costs. However, Zalando recorded a drop in sales volume (GMV) of 1.8% to 3.7 billion euros, while its turnover fell by 2.5% to 2.6 billion. euros in the second quarter compared to the previous year.
“In a temporarily challenging retail environment, we continue to make sustainable efficiencies in order management and marketing,” said Sandra Dembeck, Zalando’s chief financial officer, in a statement. “These efforts paid off this year, with adjusted EBIT nearly doubling in the second quarter. This success puts us in pole position to focus more on investments and future growth initiatives.”
With these results, Zalando has revised its forecast for the full year 2023. Adjusted EBIT in 2023 is now expected between 300 million euros and 350 million euros. Previously, the company was planning between 280 million euros and 350 million euros. As for the GMV, it should be between 1 and 7 percent while the turnover could be between minus 1% and 4%.
Partnerships with new brands
To strengthen its portfolio, Zalando has signed partnerships with sports and beauty brands. Among them there is lululemon, which offers apparel and accessories for yoga, running, working out, and most other athletic activities. There is also the French brand of running equipment, Hoka. The share of partner brands in Zalando Fashion Store GMV (sales volume) increased by almost 7% and the share of items shipped by Zalando Fulfillment Solutions increased by 3% in the second quarter compared to Q2. last year.
In the field of beauty, Zalando has strengthened its partnership with luxury brands such as Lancôme, Mugler and Shiseido.
AI to improve the customer experience
During the second quarter, Zalando also developed a new tool of artificial intelligence which allows customers from Germany, Austria and Switzerland to receive size recommendations for certain garments, based on their measurements. By taking two pictures of themselves with their phone in tight-fitting clothes, Zalando is able to help them find the right size clothes.
“We are investing in areas such as storytelling and technology, which will drive our future growth. Our new sizing and fit evaluation tool will further enhance the shopping experience. This is a revolutionary solution in the industry, which will help customers find the perfect size before delivery. It’s really exciting because it shows how one of fashion’s biggest e-commerce challenges can be solved at scale,” Robert Gentz, co-CEO of Zalando, said in a statement.
Founded in Berlin in 2008, Zalando provides clothing, footwear, accessories and beauty products to more than 50 million active customers in 25 markets across Europe. Zalando plans to publish the results for the third quarter of 2023 on November 2.
