German online fashion retailer Zalando reported growth in the second quarter of this year, despite an increase in spending on marketing. The company focused on retaining customers who had shifted to online shopping during the pandemic by ramping up advertising efforts as lockdowns eased and physical stores reopened. Zalando’s active user base remained strong with 44.5 million active users by the end of June.

During the initial wave of the pandemic, Zalando experienced a surge in demand and reduced advertising. However, realizing the need to sustain growth, the company decided to invest more in marketing during the second quarter. This strategy resulted in second-quarter sales of €2.73 billion ($3.24 billion) and an adjusted operating profit of €184.1 million, meeting analysts’ expectations. Despite this positive performance, Zalando’s shares decreased by 4.5% in early trading.

In contrast, Zalando’s rival ASOS, based in Britain, faced a decline in shares due to slowdown in sales growth caused by COVID-19 uncertainty and unfavorable weather conditions. Zalando, on the other hand, reaffirmed its full-year sales growth expectations of 26-31% and projected a revenue range of €10.1-€10.5 billion. Additionally, the company expects to achieve the upper half of its guided range for adjusted earnings before interest and taxation (EBIT) of €400-€475 million.

One factor contributing to Zalando’s success is its initiative to integrate 4,700 brick-and-mortar stores into its online platform, a move accelerated during the pandemic. This integration allows customers to access a wider range of products, enhancing the overall shopping experience. Expanding its network of physical stores further reinforces Zalando’s position as the leading fashion e-commerce player in Europe.

Despite the challenges posed by the pandemic and the reopening of physical retail, Zalando has successfully retained its customer base and achieved consistent growth. Its strategic investments in marketing and the integration of brick-and-mortar stores into its platform have proven to be fruitful endeavors. As the fashion industry continues to evolve, Zalando remains at the forefront of innovation and adaptation, cementing its role as a key player in the online fashion retail sector.

Useful links:
1. Zalando Official Website
2. Reuters Article on Zalando’s Marketing Spending Increase