With many partners ‘intensifying’ their business on Zalando’s online retail platform as a result of the Covid-19 pandemic, the company reported solid earnings for the latest quarter.
On Tuesday (11 August), European fashion and lifestyle platform Zalando announced its financial results for the second fiscal quarter of 2020.
The company reported a significant expansion of its customer base in the first half of 2020, with 20.4pc growth year-over-year. Zalando’s digital fashion platform now serves more than 34m active customers across Europe.
In a statement on the funding, the company said that despite a challenging trading environment in March, Zalando grew profitably between January and June, with gross merchandise volume (GMV) growing by 25.1pc to €4.72bn.
Revenue grew by 19.6pc to €3.56bn and in the same period, the company achieved an adjusted earnings before interest and taxes (EBIT) of €113.3m at a margin of 3.2pc. In comparison, in the first half of 2019, the company achieved an adjusted EBIT of €108.1m at a margin of 3.6pc.
Enabling future growth
Now that it is halfway through the year, Zalando said that it will take “decisive and transformative steps” to enable future growth by investing in customer relationships, growing its active customer base and driving its platform transition.
In order to prepare for the uncertainty ahead as a result of the Covid-19 crisis, Zalando has raised €1bn in additional liquidity through the placement of convertible bonds.
The company’s chief financial officer, David Schröder, said: “In the past months we have proven the strength and agility of Zalando in many ways, no matter how challenging the environment. We have come out of the first wave of this pandemic stronger than we went into it as a result of our strategic clarity, our strong partnerships and an extraordinary team effort.”
Schröder added: “Many of our partners have intensified their business on our platform in the last months and we have managed to successfully grow together.”
Plans for the second half
In the second half of the year, the company plans to accelerate its partner programme and connected retail programme, which enables brick-and-mortar stores to scale their digital businesses. The firm said that this scheme has proven “highly successful” during the pandemic.
In Q2 of 2020, Zalando added 180 new brand partners to its partner programme and as a result, the programme GMV grew more than 100pc on the same quarter last year. Additionally, there was increased demand for the company’s services, including Zalando Fulfilment Solutions, as the volume of items shipped grew 180pc.
Following the strong growth in Q2 of 2020, the company has published an updated guidance. For the full year of 2020, Zalando expects GMV growth of 20 to 25pc and revenue growth of 15 to 20pc, an adjusted EBIT of €250m to €300m and investments between €230m and €280m.