Increasing online demand is attracting new partners to the platform
Zalando SE has raised its forecast for the 2020 financial year following exceptionally strong results in the second quarter. The online platform for fashion and lifestyle expects strong and profitable growth for the current financial year and expects an increase in gross merchandise volume (GMV) of 20 to 25 percent and sales growth of 15 to 20 percent. In addition, Zalando expects an adjusted EBIT of between 250 and 300 million euros and continues to plan investments of 230 to 280 million euros.
According to preliminary figures for the second quarter of 2020, Zalando was able to increase its GMV by 32 to 34 percent to 2,67 to 2,71 billion euros and its sales by 26 to 28 percent to 2,01 to 2,05 billion euros. Adjusted EBIT was between 200 and 220 million euros in the same period.
The decisive factors for the exceptionally strong growth in the second quarter were, on the one hand, “the company's quick and consistent response to the crisis and the associated focus on the implementation of the platform strategy, and on the other hand the accelerated shift in customer demand from offline to online as a result of the ongoing Corona pandemic,” said Zalando. The number of new Zalando customers has increased significantly in the last few months. More than three million new customers shopped at Zalando in the second quarter. Zalando's shopping club, Zalando Lounge, has also benefited greatly from this development. The sales and campaign-based business model saw record growth in page views and revenue.
The strong financial result was also boosted by two temporary effects. First, catch-up effects from the first quarter had a positive impact on GMV and revenue growth. The renewed demand since April led to strong sales of spring and summer fashion. Secondly, Zalando recorded a decrease in the average returns rate during the same period, which had a positive impact on the profitability of the business. The main reasons are the changed shopping behavior - including increased demand for sports, children's fashion and beauty items - as well as the strong increase in new customers.
Zalando's partner program also grew strongly in the second quarter. In order to reach customers across Europe, brands and retailers have expanded their online activities and offered more product ranges on the Zalando platform. Between April and June, around 180 new partners were added to the partner program, and the GMV of the partner program increased by more than 100 percent compared to the previous year. Zalando wants to continue investing in its platform business in the second half of the year and at the same time continue to expand its wholesale business. An example of this is the Swedish brand Arket, which belongs to the H&M group and will be available to Zalando customers from August.
In order to link online retail more closely with brick-and-mortar retail, Zalando has further internationalized its Connected Retail program. Since July, Zalando customers in Spain, Sweden and Poland have also been able to shop from local retailers who offer their range via the Zalando platform. There are currently over 1.800 brick-and-mortar stores in five countries, including Germany and the Netherlands, connected to the program.
