BERLIN — Zalando said net profits fell 20.7 percent in the second quarter due to writedowns in accounts payable related to an uptick in fraudulent activity, but net profits for the first half soared versus the same period a year ago.
In final figures released on Thursday, the Berlin-based e-tailer reported net profits of 23 million euros, or $25.4 million, in the April-June period, down from 29 million euros, or $39.8 million, in the second quarter of 2014. In the first six months of the year, net profits totaled 47.3 million euros, or $52.8 million, compared to 200,000 euros, or $274,300, for the period a year previously.
Dollar figures are converted at an average exchange rate for the respective period.
Adjusted earnings before interest and taxes in the second quarter were also hit by a temporary increase in payment costs due to the fraudulent activity, falling 14 percent to 30.2 million euros, or $33.4 million. In a conference call, management board member Rubin Ritter said the problem, which had been reported earlier in the year, has now been fixed.
Sales in the second quarter jumped 34.1 percent to 733 million euros, or $810.6 million, exceeding the group’s original expectations and hitting the midrange of Zalando’s forecast when the group released preliminary figures late last month.
Zalando said a strong spring season helped power Q2 sales growth, as well as a larger active customer base. Active customers grew 19.7 percent to 16.4 million customers in the quarter, which also represents a gain of one million new customers compared to the first quarter of the year.
The e-tailer registered 412 million visits in the quarter, compared to 323 million visits the year previously, and visits via mobile devices booked a 57 percent increase, with the Zalando app downloaded about 11 million times by the end of June.
Looking at the January-June 2015 period, Ritter said “this was the best half-year” Zalando has ever had. Adjusted group EBIT surged 79 percent to 59.2 million euros, or $66.1 million, in the first six months of 2015, representing an adjusted EBIT margin of 4.3 percent, up from 1.2 percent a year earlier. Group sales gained 31.5 percent to 1.38 billion euros, or $1.54 billion, in the period.
Ritter attributed the strong performance to a “greater level of service. The assortment was more modern, we launched new categories, we sped up deliveries, especially in the U.K., Netherlands and France, and we significantly increased flexibility in ordering. We had the largest in-season order ever,” he added.
Based on the half-year figures, Zalando has raised its topline sales guidance for the full year to 28-31 percent growth, up from the group’s original sales growth corridor of 20-25 percent. Zalando’s guidance for the adjusted EBIT margin remains unchanged at approximately 4.5 percent.
Zalando will remain in expansion mode for the rest of the year, Ritter noted. Planned projects include the extension of its warehouse in Mönchengladbach, adding 30 percent capacity, as well the building of a third large warehouse in Germany, similar in capacity to the existing facilities in Erfurt and Mönchengladbach, in an as-yet undetermined location.
Furthermore, Zalando will be opening its first satellite warehouse outside Germany. Ritter said this would most likely be in Italy, where Zalando will be working with a local partner, and he added that if successful, the pilot project will be rolled out to other countries in Zalando’s 15 European market base “adding more capacity for growth.”
The e-tailer also added about 1,500 employees to its roster in the first half of the year to a total of 9,079, and it expects to increase its workforce to 10,000 by the end of the year.