Zalando: no end to growth in sight

Zalando: no end to growth in sight

Online fashion retailer Zalando does not expect the online boom in fashion retail and its own growth to end soon, despite falling infection figures. "We have been observing the trend of demand towards online for the last ten years", said chief financial officer David Schroder on Thursday at the presentation of the quarterly figures of the Berlin-based company. "This trend has accelerated during the crisis and is definitely not over yet."

Sizable profit after loss a year ago

After weakening at the beginning of the crisis last year, the company has been growing rapidly since then. In the first quarter, earnings rose by almost 47 percent to 2.2 billion euros, as the company announced in Berlin on Thursday. Net Zalando earned 34.5 million euros. In addition to high demand, lower returns also played into the Berlin-based company’s hands. In the previous year, a loss of 86.4 million euros had been incurred.

In the weak prior-year quarter, the Corona crisis had struck for the first time, briefly dampening consumers’ propensity to spend. In addition, special write-downs on inventories had weighed on earnings.

Zalando is now one of the beneficiaries of the pandemic. The number of active customers rose to almost 42 million in the first three months of this year. That was around a third more than a year ago.

Platform for secondhand

The company now also caters to the growing demand for second-hand clothing and launched its own second-hand platform a year ago. Around 250.000 articles were sold via this platform in the first quarter, according to the company. How large the share of total sales is, remained unknown. Those who offer their used clothing there can donate the purchase price or receive it in the form of a voucher. This is how Zalando keeps customers in its own system.

However, Zalando does not only earn money with private customers: It solicits brands and stationary retailers who offer their products on the platform. The crisis-hit individual retailers, whose stores are still closed, were thus given the opportunity to sell online with high reach, Schroder said. "Last year, as well as in the first quarter, we wanted to be part of the solution."

Expansion of infrastructure planned

Commissions for traders were therefore waived last year and in the first quarter. Now they have been gradually reintroduced. Schroder did not comment on the high level at first. Brands and retailers now contribute around a quarter of the so-called merchandise value, i.e. the value of all goods after deducting returns and cancellations. In the long term, this figure is expected to rise to 40 percent.

Zalando also offers to handle shipping and logistics for store customers. To this end, the company is continuing to expand its own infrastructure. Zalando plans to expand its logistics network from the current 10 to 15 logistics centers by 2023. Another location is to be added in Germany as well. The exact location was not initially announced on Thursday.

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