About You, the digital personalized fashion e-tailer, has defied market challenges by achieving early profitability. In the first quarter, the company saw significant improvements in adjusted EBITDA, going from a €28.8 million loss to a €4.2 million profit compared to the previous year. This success can be attributed to strategic and operational measures that have increased profitability in all segments.

The improvement in About You’s core German-speaking European markets has been a key factor in its profitability. The adjusted EBITDA margin increased from 4.1% to 5.2%. The Rest of Europe (RoE) region also saw a significant improvement, with the adjusted EBITDA margin going from -20.1% to -5.3%.

Despite a volatile macroeconomic environment and subdued consumer sentiment due to cold weather in Europe, About You achieved a 0.6% revenue growth in Q1, reaching €507.1 million. This growth is particularly impressive considering the high level of inventories in the fashion industry. The company also experienced an 8.6% increase in active customers, reaching 12.8 million, and a 4.6% increase in average order frequency to 3.1.

Looking ahead to the current 2023/24 financial year, About You expects group revenue growth between 1% and 11%, while reaching adjusted EBITDA break-even. This outlook reflects the company’s confidence in its ability to sustain its growth trajectory and achieve profitability.

Several factors have contributed to About You’s success in achieving profitability ahead of expectations. The company implemented cost reductions in marketing and administration, resulting in a 51.1% decline in marketing costs to €51.3 million. The cost-to-revenue ratio was also significantly reduced to 10.1% from 20.8% in the previous year.

To drive sales, About You focused on performance marketing, influencer campaigns, and content creation for its app and website. Operational efficiencies and a slowdown in hiring, particularly in non-tech functions, helped reduce administrative expenses by 15.1%.

However, About You did face challenges in terms of fulfillment costs and gross margin. Fulfillment costs increased by 9.3% to €120.5 million, resulting in a higher cost-to-revenue ratio of 23.8% compared to 21.9% in the previous year. The decline in gross margin from 42.6% to 39.5% can be attributed to higher discount levels in the fashion industry.

Co-Founder and Co-CEO Tarek Müller expressed satisfaction with the company’s performance, noting that they were able to reach break-even ahead of plan despite a challenging market environment. He highlighted the early strategic and operational measures that allowed for optimization in areas such as inventory, logistics, marketing planning, and hiring. Müller believes that these measures will continue to yield positive results and pave the way for long-term profitable growth.

About You is establishing itself as one of Europe’s fastest-growing online fashion stores. Its achievement of early profitability despite market challenges showcases its strategic approach and adaptability. With solid revenue growth and a focus on cost reductions, About You is well-positioned for ongoing success and future growth in the fashion e-commerce industry.

Useful links:
1. About You Website
2. Reuters Article on About You