Zalando on course for strong growth in 2017

Ecommerce giant Zalando has posted revenues up 21.5% in the first half of 2017 to €2.08bn, while EBIT was static at €102.1m as the business continues to invest in its infrastructure.

Q2 revenue was up 20.1% at €1.1bn and EBIT was again static at €81.8m. As a result Zalando is predicting full-year revenue growth at the upper end of the 20%-25% range with EBIT growth in the lower half of the 5%-6% range.

The business has plans to invest in two new large European fulfilment centres in Poland and Italy to operate alongside its existing large sites in Erfurt, Mönchengladbach and Lahr in Germany. It is preparing to launch initial operations in Gryfino near Szczecin, Poland in the third quarter of this year.

These large fulfilment operations are complemented by smaller fulfillment centres in Brieselang near Berlin, as well as localized warehouses in Stradella near Milan, Moissy-Cramayel near Paris, and by the end of the year in Brunna near Stockholm.

“We firmly believe that growth is the right strategy to increase the value of our business. Our updated guidance reflects our focus on growth at solid profitability levels. It is in our DNA to continuously evaluate additional investment opportunities, test ideas, and then start scaling them. This can range from assortment additions to our recently launched customer loyalty program Zalando Zet," said co-CEO Rubin Ritter.

Zalando Zet was announced last month and offers premium services to VIP clients, such as pick-up of returns on demand and early access to sales. It is currently being trialled in Germany on an invitation only basis. Also during the last quarter the business announced Zalando Fulfillment Solutions, with Bestseller as first flagship partner, allowing fashion brands access to its logistics infrastructure and know-how.

CAPEX in the first half (excluding M&A) reached €130m and the business said it was on course to invest €250m this year.

The business said the main drivers for growth during the last quarter were a growing active customer base as well as an increase in average orders to 3.7 times per year. Active customers increased by approximately 800,000 to 21.2m compared to the previous quarter, which was the strongest increase since the fourth quarter 2015.