Zalando, the online platform for fashion and lifestyle, presented its Q1 2023 results highlighting it delivered a slight growth and improved profitability, helped by rising demand at its online shopping club Lounge by Zalando and partners selling more fashion and beauty products on the company's platform.
The group’s revenue increased 2.3% to €2.3 billion in the first quarter compared with the €2.2 billion of a year ago. The company broke even at an adjusted earning before interest and tax (adjusted EBIT) level, compared with the €52 million loss registered in the first quarter a year ago.
The number of active customers grew 4.8% versus last year to 51.2 million.
Zalando’s growth comes amid a continued challenging economic environment with high inflation. Better order economics, primarily bigger basket sizes as customer spending remains resilient, led to lower fulfillment costs and a significant improvement in adjusted EBIT. The focus on profitable growth means the company is on track to meet its full-year guidance.
Zalando confirms its full year guidance for 2023. GMV (Gross Merchandise Volume) is expected to grow between 1% and 7%. Revenue is expected to develop in the range of -1% to 4% compared with last year. Zalando will continue its focus on profitable growth delivering margin progression while continuing to invest through the cycle for future growth.
It expects adjusted EBIT to be between €280 million and €350 million this year.
“The first quarter demonstrated how flexible our business model is, enabling us to perform in a challenging market environment as we saw strong customer demand at our off-price segment and a strong performance of the partner business,” said Robert Gentz, Co-CEO, Zalando.
“Curated product drops with brands such as Adidas and Salomon or teaming up with designer brands to create capsule collections led to increased engagement with our customers. These exclusive and limited-edition products keep our customers coming back more regularly,” added Gentz.
In April 2023, Zalando and Paco Rabanne launched a s/s 2023 capsule collection, exclusively available on Zalando. The 40-piece collection embodies is part of Zalando’s ambition to create an inspirational shopping experience for the new generation of designer and luxury consumers.
Lounge by Zalando, an online shopping club that offers customers limited-time offers and discounts on premium brands and which makes up a major component of the off-price segment, grew particularly strongly in the first quarter, contributing to a 33% increase in revenues at off-price.
“Our focus on profitable growth is working and delivering results,” said Dr. Sandra Dembeck, Zalando's CFO. “As overall demand remains muted, we continue our focus on driving sustainable efficiencies in fulfillment and marketing. At the same time, we are continuing to invest selectively through the cycle into new growth opportunities, ready to capture demand when the market rebounds. For example, we have invested in our fashion discovery experience, where we present brands and assortment to customers through storytelling, as well as our Multi-Channel Fulfillment,” she added.
Multi-Channel Fulfillment is an initiative that Zalando launched a pilot of in October. The company is productising its e-commerce infrastructure in order to enable other businesses across Europe, extending its logistics solutions for brands selling via other platforms as well as through their own online shops.