Zalando turnover up 25 %, profit triples

In its past quarter, German fashion web shop Zalando performed very well once more. Turnover grew 25 % to 916 million euro and its gross profit tripled to 77 million euro, thanks to the mobile shoppers.

Profit margin doubled

“We are very proud of our first half results: They reflect strong customer momentum with strong growth at scale. Despite ongoing investments into our long-term growth strategy, our business showed increased strength and profitability,” said Rubin Ritter, member of the Management Board.

A greater number of customers placing an increased number of orders was the reason for the turnover increase. In the first half of 2016, Zalando welcomed 960 million visitors and 18.8 million actually ordered something, up from the “mere” 16.4 million from last year. A 14.7 % increase in orders per customer also helped generate more turnover. “On average, customers ordered 3 items worth on average 66 euro”, the press release states.

The company did have to deal with higher distribution costs (+ 4.2 %) and a higher marketing spend (87 million euro in the second quarter). Nevertheless, Zalando still managed to double its profit margin to 8.8 %. In its home markets (Germany, Austria and Switzerland), that profit margin even reached 13.9 %. For the first half of the year, its margin reached 5.9 %.

Strong mobile growth

One of the most important engines of this turnover growth of the “mobile app”, which allows customers to place orders whenever and wherever they want. Over the past year, the app’s download numbers more than doubled. Two out of three website visits comes from a “mobile” device.

Zalando estimates the online fashion industry, growing at a 9.6 % pace on average, to represent a sixth of the overall clothing and shoe sales in Western Europe. Its growth will not be stunted for a while, because analysts feel its share will increase to a third over the next few years.