Zalando breaks even despite “muted demand”

(update) The fashion market is in a rut, Zalando acknowledges. Yet the e-commerce platform was able to count on more outlet shoppers and more sales partners last quarter, delivering profitable growth.

Third more outlet

Zalando sold 2.8% more (gross trading volume) in the first quarter, whereas sales rose 2.3% to 2.3 billion euros. The number of active customers climbed 4.8% to 51.2 million, but more important was the growth of the outlet segment. The outlet corner ‘Lounge by Zalando’ grew particularly strongly in the first quarter and contributed to a 33% increase in sales in the ‘offprice’ segment. Since January, the Lounge has been revamped.

At the same time, Zalando is leaving even more to its external sales partners. Brands and partners accounted for 39% of all sales, which is 8 percentage points more than a year ago and another step forward towards the 50% targeted by the platform. The company has recently started letting partners use its e-commerce logistics elsewhere: even on other platforms or for its own online shops, Zalando can do the fulfilment.

Break-even achieved

In this way, the marketplace aims to become profitable, something it narrowly succeeded in the first quarter. Zalando managed to get customers to buy more at once, reducing handling costs and breaking even on adjusted EBIT. A year ago, there was a loss of 52 million euros. “As overall demand remains weak, we continue to focus on driving sustainable efficiency in fulfilment and marketing,” said CFO Sandra Dembeck.

Zalando does, however, continue to invest in new growth opportunities, ready for “when the market picks up”. For instance, the e-commerce player continued to bet on luxury with a capsule collection as a tribute to the recently deceased Paco Rabanne and there were ‘drops’ by brands like Adidas and Salomon. “These exclusive and limited-edition products keep our customers coming back more regularly,” says co-CEO Robert Gentz.