Huge profit growth Zalando hides disappointing sales figures

Zalando had a quarter of mixed feelings: all sales figures went down, but adjusted profit rose by a staggering 72 %. The underlying reasons sound familiar, but the German platform has two new reasons to be optimistic.

Threshold statistic under threat

Even the very largest of retailers are struggling with the post-pandemic dip: sales on the Zalando platform were down 2.4 % compared to a year earlier: the Gross Merchandise Value dropped to 3.2 billion euros. Group revenues fell 3.2 % to 2.2 billion: sales were down both within the core German-speaking market and in “the Rest of Europe”. The platform blames the “challenging macroeconomic environment” and the extremely warm September month that dissuaded customers from buying autumn and winter clothes.

Other indicators also went into the red: there were fewer active customers (Zalando even threatens to fall below the magic limit of fifty million active customers: the counter now stands at 50.1 million), significantly fewer orders (from 58.8 million to 54.5 million) and fewer orders per customer. Fortunately for the Germans, the average order value did go up slightly to 58.9 euros.

On the other hand, adjusted gross profit grew by almost three quarters to 23.2 million euro. Lower fulfilment costs played a key role in this. With the combination or falling sales but rising profits, Zalando is seamlessly continuing its second-quarter results.

Confidence in innovations

Zalando confirms its profit forecast for the full financial year (between 300 and 350 million euros), but does remove all forecasts for sales growth. Instead of forecasting “between a 1 % decrease and a 4 % increase”, the forecast now only mentions “a decrease between 3 and 0.5 %”.

The German platform also says it is confident of two recent innovations, which should ensure improved results. Stories on Zalando was launched in September and should attract luxury brands, while ZEOS (a launch in October) opens its logistics network to other brands