Minor profit drop for Zalando

German fashion retailer Zalando has raised its turnover by nearly 25 % in the past fiscal year, but it did suffer a profit drop. That was largely due to its home markets, because in the rest of Europe Zalando achieved its first profit. 

Strong growth in German-speaking world

Zalando’s turnover reached 4.489 billion euro, which is a 23.4 % growth compared to the year before. That is a slightly faster pace than 2016’s 23 % turnover growth. The main reason for the surge is its performance in the DACH region (Germany, Austria and Switzerland), where turnover grew 18.3 % – a lot faster than in 2016. The company grew 25.7 % in the rest of Europe, but that was slower than the + 29.6 % of 2016.

“In 2017, we made significant headway and won market share in all our markets. In 2018, we will target our 20-25 % growth corridor for the fourth consecutive year”, co-CEO Rubin Ritter said.

Profit in “Rest of Europe”

The adjusted EBIT dropped slightly from 216.3 to 215.1 million euro and the profit margin dropped from 5.9 to 4.8 %. EBIT in the DACH region dropped from 226.3 to 188.5 million euro, but in the rest of Europe Zalando turned 2016’s 3.3 million euro loss into a 21.6 million euro profit. The entire group’s net profit dropped from 120.5 to 101.6 million euro: the company did spend less on marketing in 2017, but there was a higher logistical cost in 2017. For instance, Zalando opened distribution centers in France, Italy, Sweden, Poland and Southern Germany.

There has been a massive growth in Zalando’s customer base: the web shop attracted 2.563 billion visits in 2017, compared to 1.991 billion in the previous year. The number of active customers from from 19.9 to 23.1 million and the orders followed suit, from 69.2 to 90.5 million. The average spend did drop from 66.6 to 64.5 euro.