Zalando, the renowned online fashion retailer, has recently reported a significant loss in the first quarter of this year. However, amidst the financial setback, the company has noted positive developments in its key category and beauty products, as well as growth in its general merchandise value (GMV).

Initially disclosed in April, Zalando had projected an adjusted operating loss ranging between €90 million and €100 million. Unfortunately, the actual figure landed on the higher end of that spectrum, with a loss of €98.6 million. The wider loss can be attributed to lower customer demand in March due to lockdown measures, along with an extraordinary inventory write-down of €40 million. Consequently, the net loss for Q1 amounted to €86.4 million, in contrast to a net loss of €17.6 million in the same period the previous year.

Despite the unfavorable financial outcome, Zalando remains optimistic and highlights growth in its GMV and revenue. The company’s quarterly GMV exhibited a 13.9% increase, reaching €2 billion, while its revenue grew by 10.6% to €1.5 billion. Particularly noteworthy is the substantial growth experienced in the Off-price segment, with revenue soaring by 35% compared to the previous year.

Anticipating continued growth throughout the year, Zalando expects its GMV and revenue to rise by 10% to 20%. The company aims to achieve an adjusted EBIT between €100 million and €200 million. This positive outlook is rooted in Zalando’s unwavering commitment to its customers, which has resulted in a surge in active customers and increased order frequency. The number of active customers surged by 17% to nearly 32 million, and in April alone, there was a striking 39% increase in new customers compared to the same period last year.

During the initial months of 2020, Zalando witnessed remarkable growth in strategic categories such as children’s fashion, sports clothing and accessories, and beauty products. A standout performer has been the beauty category, which experienced a triple-digit increase due to customers investing in self-care items like scented candles and skincare products. Additionally, there has been a heightened interest in customers purchasing sustainable fashion, with nearly 30% opting for more eco-friendly products in March. These sustainable fashion items now account for approximately 10% of Zalando’s GMV.

Zalando’s global expansion is also evident through its Connected Retail offline-to-online program. The company has successfully integrated physical retailers from Spain, Sweden, and Poland into its operations. The Partner Program, which grants brands the opportunity to sell on Zalando’s platform, continues to thrive as well. In Q1, it experienced a 4.4 percentage point increase in its share of GMV, and over the past three weeks, the Program welcomed 50 new partners, including renowned brands like Vaude, American Eagle Outfitters, and Lipsy London (owned by Next).

Co-CEO Rubin Ritter expressed utmost confidence in Zalando’s growth and profitability for the year. He emphasized that the company’s success would also benefit its partners, asserting Zalando’s dedication to facilitating partner access to customers across Europe, thereby assisting them in gaining market share within a challenging economic environment. Ritter expects an upsurge in partners’ activities on the platform in the upcoming weeks.

Useful links:
1. Zalando Official Website
2. Zalando Revenue Statistics