Europe’s largest fashion e-commerce site is predicting ongoing growth, despite a new lockdown on the continent. Consumers are getting used to this new reality and the company doesn’t expect a dip in demand of the kind that occurred at the beginning of the pandemic, the company’s chief financial officer, David Schröder, said during a press conference announcing the Berlin-based company’s third-quarter results.
Zalando has benefited heftily from pandemic-related lockdowns as consumers flocked online to buy. The company saw its third-quarter revenues jump 21.6 percent to 1.84 billion euros. For the first nine months of this year, Zalando’s revenues totaled 5.41 billion euros.
Although given the situation, there is ongoing uncertainty and Zalando was still experiencing some delays in product deliveries. “What we are not seeing is a demand dip like that we saw in the first wave [of COVID-19 infections],” Schröder told journalists. “In a way customers seem to have become used to the pandemic.”
“We do expect to see longer-lasting effects of this health crisis though,” he continued. “That doesn’t mean we can’t grow. But it will probably mean that the fashion industry, as a whole, won’t be able to grow as much as it would have.”
The e-commerce platform, which looks on track to become the Amazon of fashion in Europe, now expects revenue to grow by between 20 and 22 percent and earnings before interest and taxes to end up between 325 million euros and 375 million euros for the year. That is around 5 to 7 percent higher for expected revenue and 125 million euros more for EBIT than the company’s earlier forecasts.
Zalando’s shares have risen significantly during the year. EBIT came to 105.1 million euros in the third quarter versus minus 6.9 million euros in the year-ago quarter. For the first nine months of 2020, Zalando’s adjusted EBIT has more than doubled, rising to 231.5 million euros.
Over the third quarter, Zalando had 35.6 million active users, logged 1.26 billion site visits and made 44 million sales, reflecting increases of 20.7, 26.8 and 26.7 percent respectively, compared to the same period in 2019. Almost all of these — 87.2 percent — came via mobile phones.
The average basket rose 2.4 percent after several comparatively static quarters, to 57.20 euros per basket.
Schröder noted that Zalando has continued to see the same product categories — children’s wear, beauty and sportswear — doing well since the start of the pandemic.
Although the e-tailer doesn’t give out details on sales in specific product categories, Schröder said beauty was experiencing triple-digit growth. “And there is lower demand for occasion-based categories such as dresses, and anything that has to do with the office environment, as most people are working from home these days,” he told journalists.
Gross merchandise volume, or GMV, has seen steady growth and the pandemic has accelerated that. Over Q3, GMV grew 29.9 percent to 2.45 billion euros. During the third quarter of last year, GMV only 24.3 percent and totaled 1.89 billion.
The company says the good results in GMV were fueled by strong growth in the company’s partner program, where brands use Zalando’s platform, logistics and marketing services to sell, and its shopping club, Zalando Lounge. Volumes at the partner program almost doubled during the third quarter and Zalando Lounge grew by 50 percent, the company reported.
Thanks to the pandemic, Zalando had also seen growth in its Connected Retail scheme, which allows brick-and-mortar stores to sell what is on their shelves via the platform. Although Schröder wouldn’t give details on exactly how much the scheme was worth to Zalando, he said it already made up around 6 percent of GMV in Germany during the third quarter, a number that had risen as high as 10 percent during the August end-of-summer sales.
“We want to double down on that success,” Schröder confirmed. Around 2,000 stores are already attached to the scheme and Zalando wants to triple this by 2021. Since November, retailers in Norway, Denmark and Finland have been able to access the program and next year, those in Austria, Switzerland, France, Italy and Belgium should also be able to.
Given that the new European lockdown looks likely to continue on through the upcoming sales season, including Cyber Week and Christmas, Schröder said Zalando was launching a second coronavirus response package for its connected retailers, waiving commissions on sales until next March and organizing early pay outs on products sold through Zalando.