Zalando sees more 'normal' trading in Q3 but GMV still rises strongly
German fashion e-tail giant Zalando said on Wednesday that Q3 was a strong one — albeit with more ‘normal’ trading patterns now that customers can also visit stores.
It was the first quarter since economies fully reopened and it saw gross merchandise value (GMV) up 25.3% to €3.1 billion.
And it upgraded its 2021 guidance to GMV growth of 31%-36%, revenue growth of 26%-31% and adjusted EBIT in the upper half of the guided €400million-€475 million range.
Growth rates stated to normalise during the quarter, as expected, compared to the elevated levels achieved during the first half of the year.
But this still meant strong growth for the firm. That GMV hike was slightly above the firm’s expected range of +20%-25%. And revenues grew in the period by 23.4% to €2.3 billion.
“Strong customer acquisition and the continued positive development of existing customers have been key growth drivers”, it said.
Zalando grew its active customer base by 30.1% year-on-year to 46.3 million by the end of the quarter. Customers also ordered more frequently, with average orders per active customer reaching a new all-time high at 5.1 orders over the past 12 months. Throughout the quarter, Zalando’s platform business developed strongly and grew faster than overall GMV growth.
As mentioned, adjusted EBIT was €9.8 million in the third quarter, corresponding to a margin of 0.4%, “and thus a more normalised level of profitability compared to the exceptional result recorded in the third quarter of 2020”. A year ago, the figure had been €118.2 million with a margin of 6.4%. But profitability levels in the third quarter 2021 “are very much in line with the third quarter of 2019 [€6.3 million/0.4% margin], which was the last third quarter recorded before the pandemic”.
CFO David Schröder said: “We are pleased to see our strong performance continue. Despite growing inflation and supply chain uncertainties, we remain confident to achieve our upgraded full-year outlook.”
The company said it also “further progressed its strategic agenda by building deeper customer relationships, transitioning towards a platform business and building a truly sustainable fashion and lifestyle platform”.
The company “successfully” launched in six new markets in the second and third quarter with locally tailored assortments and local payment. And it continues the international rollout of its subscription-based loyalty program Zalando Plus, enhancing the program for French customers and expanding to the Netherlands and Italy.
It has also launched more brand collaborations, including with Adidas, Levi’s, Dr Martens and The North Face.
In the third quarter, Zalando also introduced new business practices for circularity along the full product lifecycle, from developing design standards to investing in new recycling technologies.
Robert Gentz, Zalando Co-CEO, said: “Throughout the year we progressed strongly across all areas of our strategy, always keeping our focus on our long-term vision to be the Starting Point for Fashion and build a truly sustainable platform business. We are looking confidently ahead into 2022, with several strategic initiatives in the pipeline that will excite customers and partners alike and push our sustainability agenda further forward.”
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