BERLIN — Higher marketing and fulfillment costs dented Zalando’s net income in the third quarter, but for the first nine months of the year, Europe’s largest online fashion platform was in the black.
In final figures published today, Zalando reported a Q3 net loss of 28.5 million euros, or $31.7 million, compared to a loss of 500,000 euros or $663,320 for the quarter a year previously.
All dollar figures are converted at average exchange rates for the periods in question.
For the first nine months of the year, Zalando booked a net profit of 18.8 million euros, or $21 million, compared to a net loss of 400,000 euros or $542,392 a year previously.
In line with preliminary figures released last month, Zalando posted an adjusted operating loss of 23.5 million euros, or $26.1 million in the third quarter, compared to an adjusted earnings before interest and taxes of 3.8 million euros, or $5 million for the period in 2014.
Revenues surged 42.2 percent to 713.1 million, or $793.1 million, in the July-September period, and in the first nine months gained 34.9 percent to hit 2.09 billion euros, or $2.33 billion. Zalando noted sales are moving toward the 3 billion euro mark for 2015.
“To be honest, a negative EBIT in the quarter is not a major issue for us,” board member Rubin Ritter pointed out in a conference call Thursday morning. “We are making the right investments to support growth, and we will be clearly profitable for the full year, so we see no issue.”
He asserted that Zalando has been growing three to four times faster than the market, grabbing market share and generating strong performance not only in its core DACH markets of Germany, Austria and Switzerland but across the platform’s 15 European markets.
Sales growth has been driven by what Ritter called “fundamentals” which lead to an “all-time high in customer satisfaction in Q3,” he reported. Initiatives included the addition of new brands Gap, Banana Republic and “others more in the premium end,” which he declined to name, and a stronger focus on less developed Zalando categories like underwear which stars in the new Zalando/Calvin Klein Underwear cooperative campaign Share Your Sexy going live this weekend.
He noted “great progress” had been made in the mobile offering, with mobile now making up almost 60 percent of site visits, which rose 22.5 percent in the quarter to 393.9 million. Investments were made in an elevated shopping convenience via easier returns and the launch of same-day delivery in Berlin and Cologne, more temporary investments in additional operating capacity, coupled with tech investments, especially in personnel. Zalando now employs 900 tech specialists and expects to have 1,000 on the payroll by the end of the year.
As reported, Zalando adjusted its full-year guidance last month, boosting its revenue growth target to 33-35 per cent, up from 28-31 percent, but also lowered its EBIT goals to an adjusted EBIT margin of 3-4 percent, down from 4.5 percent.
The Zalando share was trading up 2.3 percent at 31.65 euros in early morning trading in Frankfurt. The share made its Frankfurt debut in October 2014. The initial issue price was 21.50 euros.