Europe's Zalando sees growth & improved profitability in Q1 2024

Despite a slight dip in revenue, from €2.3 billion to €2.2 billion (~$2.37 billion to ~$2.48 billion), Zalando's adjusted earnings before interest and tax (adjusted EBIT) surged to €28.3 million (~$30.47 million), aligning with market forecasts and showcasing a notable margin of 1.3 per cent.

This achievement comes on the heels of strategic enhancements, including a focus on refining its product assortment, amplifying lifestyle offerings, and elevating the overall customer experience.

“As we are executing our ecosystem strategy, we are excited by the positive response from customers and partners in the first quarter. We are returning to growth,” said Dr Sandra Dembeck, Zalando CFO. “B2C customers are showing increased interest in our quality assortment, digital tools, propositions and inspiring content. B2B customers are signing up for our unique offering. Both of our growth vectors are strong and contributing to results, demonstrating the strength of our plans.”

Within the B2C growth vector, Zalando’s first pillar is to differentiate itself through quality to offer the best possible shopping experience in fashion and lifestyle. In the first quarter, the company further elevated its assortment, for example by launching the premium sports brand ‘On’ in 22 markets. To further improve the quality of its digital experience, Zalando rolled out its size-advice-with-body-measurement tool to customers in Spain, France and Italy, bringing the total to six markets. Zalando also expanded its inclusive assortment with the launch of 20 adaptive kid’s shoes styles after talking to parents of disabled children to identify their needs.

The second growth pillar of Zalando’s B2C strategy - expanding further as a lifestyle destination by elevating existing categories into distinct propositions - showed strong results in the quarter. Propositions offer a captivating experience by combining a more comprehensive assortment, advice features, personalised inspiration and seamless convenience, the company said in a press release.

For the third B2C growth pillar - integrating content into commerce and offering personalised inspiration and entertainment - the company added new functionality to the Zalando Assistant that allows customers to ask questions using voice instead of just text, making the experience even more intuitive and natural. A new source of inspiration, called Trend Spotter, shows customers emerging fashion trends across six major European fashion capitals. Entirely powered by Zalando’s data, it presents top items that are trending among customers in Berlin, Paris, Milan, Antwerp, Stockholm and Copenhagen every week.

In B2B, Zalando is opening up its logistics infrastructure, software and service capabilities to be a key enabler for e-commerce transactions of brands and retailers, regardless whether they take place on or off the Zalando platform. Five more partners came on board for ZEOS multi-channel fulfilment in the first quarter bringing the total to 27 merchants.

Zalando has confirmed its full year guidance for 2024 and expects both GMV and revenue to grow 0 per cent to 5 per cent this year compared to 2023. The company will continue to focus on profitable growth, with margin progression, and adjusted EBIT is expected to be between €380 million ($409 million) and 450 million ($485 million).

Fibre2Fashion News Desk (RR)