Zalando hails strong Q1, despite tough economic backdrop
The first three months of the year saw gross merchandise volume (GMV) rising 6.5%, revenue up a stronger 7.9%, adjusted earnings before interest and tax (adjusted EBIT) jumping by €18.4 million and margins up too.
It added that Business-to-Consumer growth was driven by a 'new high of 52.4 million active customers, successful end-of-season sales, and a promising start to the spring/summer season'.
Meanwhile Business-to-Business revenue was up 11.6%, 'driven by ZEOS fulfilment'.
The company also confirmed its full-year guidance and said it will continue to invest in future growth opportunities.
'Our ecosystem strategy is progressing well, and customers and partners are embracing our expanding offerings,' said co-CEO David Schroeder.
Looking at the details of the report, revenue grew to €2.4 billion, also supported by a strong performance in Zalando Marketing Services. GMV increased to €3.5 billion. Adjusted EBIT rose to €46.7 million in line with market expectations, compared with €28.3 million a year earlier.
Within B2C, where Zalando has been turning itself into a lifestyle destination while offering customers more personalised inspiration and entertainment, revenues rose by 7.6%, with profitability improving by 0.7pp to 1.9%. The increase in the number of active customers saw it adding 2.9 million year-on-year, reaching a new high.
As mentioned, loyalty programme Zalando Plus was key here with its continued expansion to make it live in 13 markets seeing over 15% of customers already enrolled. Zalando's 'ultimate ambition is to serve the majority of customers with this programme and to increase their average order frequency and hence their share of wallet through the programme. Early data from first markets indicates promising progress towards this goal'.
It also saw double-digit growth in its Lounge by Zalando, Sports, Designer, and Beauty propositions, as it 'continues to elevate these lifestyle categories through richer assortments, curated content, and seamless customer experiences'.
Other initiatives during the quarter that gave shoppers more of a reason to visit Zalando included its partnership with Diane von Furstenberg (DVF), which made Zalando DVF's exclusive retail partner for Europe, and it launching LVMH -owned brand Marc Jacobs on its platform.
It has also rolled out its 'boards', which enable users to create curated boards dedicated to a specific topic or lifestyle theme, to all markets as 'part of its strategy to offer customers inspiring and entertaining experiences'. More than a million customers have already interacted with the new experience. The next step will be to allow users to create, share, and engage with curated and user-generated boards, fostering inspiration and discovery across the platform.
All this resulted in that aforementioned active customer number rising to 52.4 million from 49.5 million while the number of orders increased to 58.5 million from 55.2 million. Average orders per customer over the past 12 months were stable at 4.9 but average basket size increased to €61.1 from €60.4.
In B2B, Zalando is opening up its logistics infrastructure, software, and service capabilities 'to be a key enabler for brands' and retailers' e-commerce transactions with its ZEOS operating system, regardless of whether they take place on or off its platform'. That strategy seemed to pay off with revenue growing 11.6% to €240 million and adjusted EBIT up to €5.8 million from €5.4 million, with a stable margin of 2.4%.
As in previous quarters, B2B's growth was driven by ZEOS Fulfilment, which includes Zalando Fulfilment Solutions (ZFS) and multi-channel fulfilment.
Other highlights of Q1 included Zalando's first successful partner launch on TikTok Shop Germany being completed after Zalando was selected as TikTok Shop's preferred logistics partner for fashion and lifestyle merchants in that country, as well as in France, and Italy.
As mentioned at the start, the company confirmed its full-year guidance for 2025, 'despite a fast-changing geopolitical and macro-economic environment'. It expects both GMV and revenue to grow between 4% and 9% and adjusted EBIT to reach between €530 million and €590 million, excluding the effects from the planned acquisition of About You.
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