Zalando Q1 revenue growth boosted by its online shopping club

Zalando has reported a 2.3% uplift in revenue to £1.93 billion (€‎2.2 billion) for the first quarter, with more partners selling more fashion and beauty products on the platform.

The online retailer's gross merchandise volume increased 2.8% to £2.8 billion (€3.2 billion), with number of active customers grew 4.8% to over 51 million.

Lounge by Zalando, an online shopping club that offers customers limited-time offers and discounts on premium brands, contributed a 33% revenue increase to the retailer's Offprice segment.

"The enhanced on-site customer experience and new brand identity introduced in January drew positive reactions from users interacting with the Lounge by Zalando app," said Zalando.

Against a "challenging economic environment with high inflation", the retailer also said its focus on improving profitability is "paying off".

Earlier this year, Zalando began reassessing its brand portfolio to focus on profitable growth and simplifying the organisation to become "more innovative and faster".

At the time, the retailer said it would continue to "invest in strategic areas to entice customers and help partners grow their business through the platform and direct sales outside the platform". It also plans to improve the curation and local relevance of its assortment.

Looking ahead, Zalando expects its full-year revenue to develop in the range of -1% to 4% . It also forecasts adjusted EBIT to be between £246-£308 million (€280-€350 million).

Robert Gentz, Co-CEO of Zalando, said: “The first quarter demonstrated how flexible our business model is, enabling us to perform in a challenging market environment as we saw strong customer demand at our Offprice segment and a strong performance of the partner business.

“Curated product drops with brands such as Adidas and Salomon or teaming up with designer brands to create capsule collections led to increased engagement with our customers. These exclusive and limited-edition products keep our customers coming back more regularly.”

The trading update follows a number of technology-driven initiatives from Zalando as it looks to improve its customer experience.

Last month, the retailer launched a tool powered by ChatGPT to introduce a new way to discover its product assortment and provide customers with more "intuitive fashion inspiration".

Zalando also launched a virtual fitting room service to allow customers to see how jeans will fit their personalised online avatar. The virtual fitting room experience aims to enhance its shopping experiences across 25 of the retailer's markets.