BERLIN — German online giant Zalando posted boisterous gains in second-quarter earnings and sales, riding on a growing customer base, increased average orders, stepped-up app usage, improved fulfillment capabilities and cost efficiency in operations.
In final figures released on Thursday, the Berlin-based e-tailer reported net earnings soared 121 percent to 50.9 million euros, or $57.5 million. Dollar figures are converted at average exchange for the period to which they prefer.
Adjusted earnings before interest and taxes leapt 167.8 percent leap to 80.9 million euros, or $91.4 million, compared to 30.2 million euros, or $33.4 million, for the same quarter last year. This corresponded to an adjusted EBIT margin of 8.8 percent, versus 4.4 percent previously.
Group sales reached 916.4 million, or $1.03 billion, a gain of 25 percent.
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Both sales and operative earnings for the quarter came in at the higher end of preliminary ranges released in July. As reported, Zalando increased its full-year earnings guidance, which now calls for a full-year adjusted EBIT margin of 4.0 percent to 5.5 percent, and sales growth at the upper end of a range of 20 percent to 25 percent.
In the first six months of the year, Zalando posted net earnings of 55.5 million euros, or $62.7 million, a gain of 17.3 percent. Adjusted group EBIT surged 70.9 percent to 101.2 million euros, or $114.3 million, while group sales rose 24.4 percent to 1.71 billion euros, or $1.93 billion.
In a conference call on Thursday, Zalando board member Rubin Ritter said the eight-year-old company’s growth dynamic was primarily fueled by the ongoing increase in the number of active customers, which rose about 15 percent to 18.8 million users at the end of the second quarter. These now make 3.3 purchases a year with an average basket of 66 euros, for an annual spend of about 220 euros, a gain of 13 percent.
Ritter noted that Zalando has been growing faster in lower price points, and while this could have an effect on the average basket size, “it also means the customer likes the product and is shopping more frequently,” which supports overall growth.
“We have successfully added to our brand assortment,” he said, pointing to the joint campaign with Ivy Park by Beyoncé, which garnered 260 million social media posts, or new additions like Fenty by Rihanna, Club Monaco, Ivyrevel and Kate Spade. At the first Bread & Butter by Zalando in September, the e-tailer will debut two new collaborations: Tommy Hilfiger’s ‘Tommy x Gigi’ with Gigi Hadid and a footwear collaboration with Marni, further details of which were not available.
By mid-2016, Zalando had roughly doubled the number of app downloads in the past 12 months and almost doubled app orders, Ritter said. Service has been improved, be it via a second delivery partner in Germany, Italy’s new satellite warehouse, or the first deliveries out of a new logistics hub in Lahr.
Investments have continued apace, with employees growing to 10,639 from 9,079 since last June. The Zalando tech team numbers 1,340 in seven locations.
Zalando is active in 15 European countries, with the DACH region of Germany, Austria and Switzerland contributing more than half of sales, though the rest of Europe has been catching up. In the second quarter, sales outside of German-speaking Europe rose 34.3 percent.
Asked about future growth, he said there were opportunities in Zalando’s current core business, from brands selling directly in brand shops on the site, and across the existing markets, though younger markets like Poland have made visible gains. He mentioned an “upside in potential new categories like fashion lifestyle. The fashion world is moving so quickly,” he summed up, “that there are tons of opportunities to grow.”