Zalando Sees Strong Sports Growth, Expands Quality Assortment, Invests in AI-powered Inspiration and Records Double-Digit B2B Growth to Deliver Higher Profitability and Accelerating Sales in Q2

Zalando Sees Strong Sports Growth, Expands Quality Assortment, Invests in AI-powered Inspiration and Records Double-Digit B2B Growth to Deliver Higher Profitability and Accelerating Sales in Q2

• Second-quarter gross merchandise volume (GMV) rises 2.8% to 3.8 billion euros, revenue increases 3.4% to 2.6 billion euros
• Adjusted earnings before interest and taxes (adjusted EBIT) climb to 171.6 million euros in the quarter, representing a margin of 6.5%
• Business-to-Consumer (B2C) sees strong growth in Sports, Designer and Beauty, while Business-to-Business (B2B) grows sales by 10.3%
• Full-year guidance for 2024 confirmed
• Plans to strengthen existing tech sites while adding new complementary site in China’s tech-hub Shenzhen; agreement with OpenAI to continue deep collaboration and build even more generative AI solutions together for the fashion industry.
• Chief People Officer Dr. Astrid Arndt reappointed; Chief Financial Officer Dr. Sandra Dembeck not to renew her contract

Berlin, August 6, 2024 // Zalando delivered accelerating growth and improved profitability in the second quarter as it expanded its lifestyle offerings with strong growth in Sports, Designer and Beauty, boosted the relevance of its assortment with new brands, invested in new AI-powered experiences to entertain customers and expanded its B2B business. The number of active customers grew by 300,000 to 49.8 million from the end of the first quarter of 2024.

The results demonstrate the progress in executing Zalando’s updated strategy, announced in March, to build the leading pan-European fashion and lifestyle e-commerce ecosystem around its two main growth vectors: Business-to-Consumer (B2C) and Business-to-Business (B2B).

Gross merchandise volume (GMV) rose 2.8% to 3.8 billion euros in the second quarter compared with a year ago. Revenue grew 3.4% to 2.6 billion euros compared to the prior-year period. Adjusted earnings before interest and taxes (adjusted EBIT) rose to 171.6 million euros in the second quarter, in line with market expectations, compared to 144.8 million euros a year earlier. The improvement in profitability was driven by successful inventory management and lower fulfilment costs, with the EBIT margin increasing 0.8 percentage points to 6.5% of revenue.

Zalando confirms its full-year guidance for 2024 and expects both GMV and revenue to grow 0% to 5% this year compared to 2023. The company will continue to focus on profitable growth, with continued margin progression. Adjusted EBIT is expected to be between 380 million euros and 450 million euros.

“Our ecosystem strategy empowers us to cover a larger share of the fashion and lifestyle e-commerce market, and the positive response from customers and partners in the second quarter validates our vision,” said Robert Gentz, Zalando Co-CEO. “Our B2C customers are excited by the quality brands we are adding, spending time with our new digital tools and content, and embracing our expanding lifestyle offerings in areas such as Sports, Designer and Beauty. We also recorded double-digit growth in B2B, demonstrating that both our growth vectors are delivering.”

B2C: Expansion into more lifestyle propositions well received by customers

Within the B2C business, Zalando’s first B2C growth pillar is to differentiate itself through quality to offer the best possible shopping experience in fashion and lifestyle. In the second quarter, the company improved its localised and personalised convenience offering. For example, in Sweden, Zalando reduced its delivery time for most items to a maximum of one to two days. In its efforts to build an inclusive assortment, the company also launched its own first adaptive sports collection, consisting of 14 pieces of its private label brands Pier One Sports and Even&Odd active.

The second growth pillar of Zalando’s B2C strategy focuses on becoming a lifestyle destination by enhancing categories with comprehensive assortments, personalized inspiration, and seamless convenience. In Q2, we leveraged the 'Summer of Sports' momentum, launching dedicated sports campaigns in major European cities featuring icons like Robert Lewandowski and David Alaba. This led to our best monthly sports performance ever in June.

For the third B2C growth pillar - introducing new content formats into commerce and offering personalised inspiration and entertainment - the company further developed a trend spotter as a new source of inspiration, showing customers emerging fashion trends across six major European fashion capitals on a weekly basis. It was launched earlier this year and is now also available through the Zalando Assistant. Using generative artificial intelligence, the Zalando Assistant helps customers navigate through its assortment in a more intuitive and natural way. The company also doubled down on elevated content that puts product details and aesthetics at the centre, using generative artificial intelligence to create background images for products at scale and at a much lower cost, while also increasing customer engagement.

Revenue in the B2C growth vector rose 2.8% to 2.4 billion euros in the second quarter compared with a year ago, while adjusted EBIT rose to 165.2 million euros, representing an adjusted EBIT margin of 6.8% in the quarter.

B2B: ZEOS expands its reach

In B2B, Zalando is opening up its logistics infrastructure, software and service capabilities to be a key enabler for e-commerce transactions of brands and retailers, regardless whether they take place on or off the Zalando platform. In the second quarter, ZEOS enabled Switzerland as a new market, bringing the total to 12 and added a new shopping club as a sales channel.

In the second quarter, revenue in the B2B growth vector increased 10.3% to 233.8 million euros compared with a year ago. Adjusted EBIT fell to 7.1 million euros from 15.5 million euros in the quarter from the year-ago period, representing an adjusted EBIT margin of 3.1%. The decrease was mainly caused by frontloaded investments.

Further investments in technological capabilities

To accelerate the execution of the ecosystem strategy, Zalando continues to invest in its technological capabilities. In 2023, Zalando launched the Zalando Assistant, powered by the large language models of AI research and deployment company OpenAI. After months of successful collaboration, the two companies have now committed to continuing their deep collaboration and developing more innovative Generative AI solutions tailored for the fashion industry together.

In addition, Zalando plans to strengthen its existing tech site footprint further while adding a new complementary site in Shenzhen, China’s tech heart. With the site in China, Zalando will leverage the local expertise in social commerce and combine it with the company’s deep understanding of the European market to offer its European customers personalised inspiration and entertainment.

CPO Arndt reappointed, CFO Dembeck not to renew contract

Zalando’s Supervisory Board also announced today that it reappointed Dr. Astrid Arndt as Chief People Officer for another four-year term, starting September 1, 2024. Dr. Astrid Arndt now has a broader remit, with the additional mandate of strengthening Zalando’s corporate functions to enable the effective execution of Zalando’s ecosystem strategy. The Supervisory Board also expressed its profound gratitude to Chief Financial Officer Dr. Sandra Dembeck, who decided not to renew her contract beyond her current term which ends on February 28, 2025, as she is embracing a new career opportunity.

“Astrid Arndt has been a transformative force and an integral part of Zalando's success story since 2018. She has not only been successfully leading the People & Organization teams and building a diverse and inclusive culture, she has also supported our commercial success with initiatives such as the company’s operating model and reducing complexity across the organisation. Her remit to strengthen corporate functions further will be key to making the ecosystem strategy successful," said Kelly Bennett, Chairperson of the Zalando Supervisory Board. “We also want to thank Sandra Dembeck and are grateful for all her contributions. She played a crucial part in leading Zalando as the company successfully adapted to a challenging macroeconomic environment, expanded margins, increased liquidity and steered us back to growth. She also played a pivotal role in building the strategic foundation for the company's success going forward. We wish her all the best for her future pursuits.”

The reappointment of Dr. Astrid Arndt secures strong continuity in Zalando’s Management Board. With co-CEOs Robert Gentz and David Schröder, as well as Co-founder David Schneider, having all recently committed to continue in their roles until 2027, four of the Management Board members have long-time commitments. According to Kelly Bennett, the Supervisory Board is convinced that this group of leaders is well-equipped to ensure the successful execution of the ecosystem strategy, with the company also already working on the finance role succession.

“16 years after Zalando was founded, new commercial opportunities are opening up as consumers and partners have new expectations and needs. I am excited to help bring these opportunities to life by enabling our ecosystem strategy with even stronger corporate functions and further developing our unique Zalando culture,” said Dr. Astrid Arndt.

“I am proud to have played my part in Zalando’s unique success story. Our financial discipline has put us in a position of strength, and Zalando has a great team in place to accelerate and invest in the company’s long-term growth. I’m now looking forward to embracing a new career opportunity,” said Dr. Sandra Dembeck.
 

The Q2 2024 financial report, as well as the earnings presentation for analysts and investors, is available on the Zalando Investor Relations website. Zalando will report the results for the third quarter 2024 on November 5, 2024.

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About Zalando

Founded in Berlin in 2008, Zalando is building the leading pan-European ecosystem for fashion and lifestyle e-commerce around two growth vectors: Business-to-Consumer (B2C) and Business-to-Business (B2B). In B2C, we offer an inspiring and quality multi-brand shopping experience for fashion and lifestyle products to about 50 million active customers in 25 markets. In B2B, we are using our logistics infrastructure, software and service capabilities to help brands and retailers run and scale their entire e-commerce business, on or off Zalando. As an ecosystem, Zalando aims to enable positive change for the fashion and lifestyle industry.

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Investor Relations
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