German fashion e-tailer Zalando has revealed plans to double down on its platform transition in the second half of the year after sales grew by more than 19% in the first six months.
The Berlin-based firm said despite a challenging trading environment in March, the company grew strongly and profitably between January and June.
Gross Merchandise Volume (GMV) grew by 25.1% to EUR4.72bn (US$5.56bn), while revenue was up by 19.6% to EUR3.56bn from EUR2.98bn last year. Adjusted EBIT was EUR113.3m at a margin of 3.2%, compared to EUR108.1m, at a margin of 3.6% in the prior-year period.
For the second quarter, Zalando reported group revenues of EUR2.04bn, a 27.4% rise on last year, while group GMV inceased by 33% to EUR2.7bn. Adjusted EBIT, meanwhile, more than doubled to EUR211.9m from EUR101.7m last time.
Meanwhile, Zalando now serves more than 34m active customers across Europe, representing 20.4% growth year-over-year.
Following the strong growth in the first six months of 2020, and especially in the second quarter, Zalando said it will continue to take decisive and transformative steps to enable future growth. This will include investing in customer relationships, growing its active customer base and driving its platform transition in the second half of the year.
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By GlobalDataThe e-tailer is striving to become what it calls the ‘Starting Point for Fashion’ and has introduced several new initiatives to support fashion brands and retailers during the coronavirus crisis as part of this bid. This includes waiving the commission fee for all new and existing physical stores that are participating in its Connected Retail Program and supporting brand partners in its the Partner Program by helping those in need of immediate cash relief to benefit from faster pay-out terms until the end of June.
Moving foward, it plans to accelerate both the Partner Program and the Connected Retail Program, which allows brick-and-mortar retailers to easily scale their digital business. Zalando said the latter proved highly successful during the first wave of the coronavirus pandemic.
Overall, brand and retail partners have significantly increased their activities on the Zalando platform over the past months. In the second quarter of 2020, around 180 new brand partners signed to the Partner Program, resulting in Partner Program GMV growing by more than 100% compared to the same period last year.
This is accompanied by a high demand for services, such as Zalando Fulfillment Solutions (ZFS). The volume of items shipped through ZFS grew 180% as partners look for efficient ways to reach consumers across Europe as an answer to the accelerated shift towards online. The firm has also recently introduced a new generation of data-driven tooling that aims to provide a self-service environment for partners to manage their journey on the Zalando Platform.
“In the past months we have proven the strength and agility of Zalando in many ways, no matter how challenging the environment. We have come out of the first wave of this pandemic stronger than we went into it as a result of our strategic clarity, our strong partnerships and an extraordinary team effort. Many of our partners have intensified their business on our platform in the last months, and we have managed to successfully grow together,” Zalando CFO David Schröder said.
The firm reiterated its full-year guidance, which it outlined last month on the back of its preliminiary second-quarter results. It expects GMV growth of 20-25% and revenue growth of 15-20%, an adjusted EBIT of EUR250-300m and investments between EUR230-280m.
Aneesha Sherman, analyst at Bernstein Research, notes Zalando’s solid top-line performance in the second quarter with strong customer metrics and bigger baskets.
“Basket size is actually slightly up year-on-year (vs year-on-year declines for several years) from EUR56.70 to EUR56.90, most likely driven by lower returns. Active customer growth has been much faster than at this point last year (+6m year-on-year, versus +3.7m in 19Q2). Spending per active customer has continued to grow.”
In addition, Sherman adds the firm’s ZFS has reached 50% share of Partner Program sales and is on track to overshoot Bernstein’s year-end estimate of 55% of Partner Program sales and quickly approaching the company’s long-term target of 75% of Partner Program.
