German e-commerce powerhouse Zalando has announced a successful third quarter, propelled by a decrease in return rates, prompting the company to revise its full-year forecast. Zalando experienced “exceptionally strong and profitable growth” during Q3, leading to expectations of a 25% to 27% increase in gross merchandise volume (GMV) for the year. Revenues are also predicted to rise by 20% to 22%, with an adjusted EBIT profit of €375 million to €425 million. These projections surpass the company’s previous estimates from July, which anticipated a GMV increase of 20% to 25%, revenue growth of 15% to 20%, and an adjusted EBIT of €250 million to €300 million.

Although the final results for Q3 have not been released by Zalando, preliminary figures indicate a GMV growth of 28% to 31%, amounting to €2.43 billion to €2.48 billion, and a revenue rise of 20% to 23%, totaling €1.83 billion to €1.87 billion. Moreover, the company expects an adjusted EBIT of €100 million to €130 million for the quarter. Zalando attributes its accomplishment to the effective implementation of its platform strategy and the increased demand for digital offerings spurred by the COVID-19 pandemic. Like other online retailers and omnichannel players, Zalando also highlighted a decrease in return rates. With customers making more deliberate purchases and returning fewer items, retailers can benefit from enhanced inventory visibility and reduced costs.

Furthermore, Zalando experienced a significant one-off effect due to the reversal of an exceptional write-down of inventories. The write-down was initially recorded in March when the company did not foresee the swift and sustained recovery of consumer demand. Overall, the combination of robust sales growth, lower return rates, and the reversal of the inventory write-down has positioned Zalando for a successful year. With its revised outlook, the company is confident in its ability to continue to capitalize on the thriving digital market and meet the evolving needs of consumers.

Links:
1. Zalando Official Website
2. Statista: Market and Consumer Data