Berlin-based fashion e-tailer Zalando has lowered its forecast for the full year as it moved to a loss in the third quarter, despite a double-digit sales hike.
During the period, net loss accounted to EUR11.1m (US$12.8m), compared to net income of EUR5m a year earlier, while adjusted EBIT was EUR0.4m, compared to EUR19.5m in the year-ago period. Adjusted EBIT margin narrowed to 0.0% from 2.3%.
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The loss came after a warning last month by Zalando in which it said it expects to achieve an adjusted EBIT of anywhere from a EUR5m loss to a EUR5m gain. This compares to earnings of EUR20m in the year-ago period and a margin of 2.3%.
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Revenues meanwhile, saw “very strong” growth of 28.7% to EUR1.07bn from EUR834.8m last year, while the company increased its active customer base in the period by 1m to 22.2m quarter-on-quarter, the highest absolute growth since the second quarter of 2015.
At the same time, order frequency increased to a record average of 3.8 times per active customer in the last twelve months.
During the quarter, key investments included the further build-out of Zalando’s logistics and technology infrastructure to ensure future capacity for its growing customer base and to enable partner services.
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By GlobalDataMeanwhile, its fulfillment hub in Lahr is now live with initial automated processes and is further ramping up capacity. First parcels left the new logistic sites in Gryfino near Szczecin as well as in Brunna near Stockholm, which started test operations. Both sites will ramp up operations over the next few months.
In addition, Zalando also recently announced a second fulfillment hub in Poland, which will be located in Gluchow near Lodz, where construction will start next month. Last week, the e-tailer also revealed it will open a new tech hub in Lisbon, Portugal, the third of its kind internationally. The hub will open at the beginning of 2018 with plans to create 50 jobs in the first year of operations and will focus on the digital experience of the Zalando Fashion Store, currently available in 15 European markets.
“The very strong revenue growth in the third quarter underlines our growth focus and shows that our investments already pay off,” said co-CEO Rubin Ritter. “For the fourth quarter as well as the coming years, we continue to focus on growth with the goal to double our business by 2020 and remain willing to further invest to reach this ambition.”
Looking ahead, given Zalando’s strong growth focus, the company continues to expect revenue growth in the upper half of its guided range of 20-25%, despite a weaker than expected October. As a result, Zalando forecasts adjusted EBIT margin in the fourth quarter to be slightly below last year’s strong level, leading to a full year adjusted EBIT margin of slightly below 5%, compared to its previous forecast of an adjusted EBIT margin in the lower half of the 5-6% range.
