In the second quarter of 2014, German internet department store Zalando has managed to become profitable, for the first time ever. It had focused on rapid expansion and market occupation before, with profit as a longer-term goal for investors.
Billion euro turnover in first semester
Turnover growth arrived in the second quarter as preliminary numbers indicate that sales reached 520 to 560 million euro in the March-June period. The bottom end of the estimate is still 18.9 % higher than the same period last year, when sales reached 437 million euro.
The first part of the year resulted in a 1.020 to 1.060 billion euro turnover, which is at least 25 % higher than the 809 million euro it managed in the same period last year. Part of the success was the mobile app launch in all international markets as it had already been downloaded 3.8 million times by the end of the second quarter. Mobile interaction has now reached 41 %.
Full-year results close to break-even
Zalando has also stated it has become profitable in its second quarter with company margins close to break-even, where it still had been - 9 % last year. The improvement is partially because the company has managed to keep marketing and sales costs under control, while logistic costs have also been reeled in - partially because of more efficiency at the Mönchengladbach logistics center.
This does not mean that Zalando will become profitable for the full year: "The development in the second quarter is very positive, as it combines continued strong growth with a very significant improvement in margin. Based on this development we reiterate our plan to take a significant step towards, but not quite reaching, EBIT break-even at group level for the full year 2014", Zalando's board member Rubin Ritter said.
Zalando lost 118 million euro last year, even though it managed to become break-even in Germany, Austria and Switzerland, its core markets. In its remaining 12 markets, it hasn't managed to reach profitable levels.