BERLIN – Zalando’s numbers are in the red after a difficult season and operational inefficiencies in the third quarter, despite a record number of active customers.
The e-tailer reported losses of 38.9 million euros, which, compared to 11.1 million euros for the same period last year, showed the net loss almost quadrupled. Revenue growth notably slowed down to 11.7 percent, reaching a turnover of 1.2 billion euros, despjte a record number of 25.1 active customers. This compares to growth of 28.7 percent for the third quarter of 2017.
The difficult summer and delayed season change heavily impacted the company’s performance, but Zalando said that inefficiencies in operational processes led to higher fulfillment costs and a decrease in margins.
“We are clearly not happy with the results, we did not deliver what we promised,” said co-chief executive officer Rubin Ritter in a conference call on Tuesday morning. However, he noted that the inefficiencies were identified and addressed, and said he was optimistic that Zalando will catch up in the fourth quarter to meet the lower ends of growth expectations between 20 to 25 percent with adjusted EBIT targeted between 150 to 190 million euros for the full year.
On a positive note, Zalando reported that its ‘Partner Program’ performed above expectations. By the end of the year, the company expects to connect 600 stationary stores in Germany to its retail network, further boosting the long-term platform strategy. With regard to the positive development in Germany, the ‘Connected Retail Model’ will go international in 2019. The company also launched a test-run with e-cargo-bike startup Loadster in Berlin this fall to test new delivery options.
After investments in the first beauty brick-and-mortar store, market expansions to Czech Republic and Ireland, and new logistics centers in 2018, 2019 will see ongoing investments in a new inbound distribution center in Europe and increasing investments in the efficiency of the logistics network, Ritter also said.
Final numbers for the fourth quarter of 2018 and the annual report for 2018 will be released on Feb. 28, 2019.