Zalando has lifted its sales and profit forecasts for 2021 after reporting a 23.1 percent rise in revenues to about €7,982 million for the 12 months to Dec. 31, 2020, with increases of 17.2 percent in the German-speaking countries and 28.4 percent in the rest of Europe, where they reached €3,930 million. In the fourth quarter alone, total revenues went up by 29.6 percent.
In disclosing its figures, the big German-based e-tailer, which is also a major partner for sports brands such as Adidas and Nike, said it plans to grab more than 10 percent of the European fashion market worth €450 billion in the longer term.
Revenue growth was driven by Zalando’s partner program and record levels of new customer acquisition. In 2020, the number of its active customers jumped by 25 percent to 38.7 million. The key gross merchandise volume (GMV) indicator showed an increase of 30.4 percent to €10.7 billion, boosted by Zalando’s Connected Retail program.
The adjusted operating profit of the group (Ebit) nearly doubled to €421 million from €225 million, improving the operating margin to 5.3 percent from 3.5 percent a year earlier. It amounted to 8.7 percent of sales in the German-speaking countries and 1.4 percent elsewhere. The Ebit margin reached 7.4 percent in the fourth quarter.
Raising its earlier expectations, the company is now projecting Ebit of between €350 million and €425 million in 2021. It also expects revenue growth of 24-29 percent to around €10.3 billion in the 2021 financial year. GMV is forecast to increase by 27-32 percent to €14.1 billion, with a growth of around 50 percent in the first quarter, following the introduction of the partner program in new markets in Scandinavia. By 2025, GMV is forecast to rise to more than €30 billion, the company said, with the partner program growing to 40 percent of the total from 15 percent in 2020.
David Schneider, joint chief executive of Zalando, said the Berlin-based company plans to triple its network of connected bricks-and-mortar stores on the platform in 2021 from the current level of 3,400 active points of sale. “We already have a good network here, but we also plan to expand throughout different markets. We’re excited because we can create the same customer experience offline and online,” he said.
Zalando also said it plans to invest between €350 million and €400 million in logistics infrastructure and technology in the current year.
Visits to the company’s websites across Europe rose by 29.1 percent last year to 5.4 million, with mobile visits taking an 86.3 percent share. The number of orders went up by 28 percent to 185.5 million and the average basket size increased to €57.7 from €56.6.
Zalando plans to expand its presence into eight new European markets in 2021 and 2022, it said. This year, it will move into Croatia, Estonia, Latvia, Lithuania, Slovakia and Slovenia, followed by Hungary and Romania in 2022.
Founded in 2008, Zalando has grown into Europe’s biggest online-only fashion retailer, selling clothes, accessories and beauty products in 15 markets.
In the fourth quarter of 2020, Zalando’s Partner Program accounted for 24 percent of Zalando’s Fashion Store GMV. More than 2,400 stores were connected to the Zalando platform by the end of 2020 through the Connected Retail program, the company said.
“The growth of Connected Retail underlines the value that the combination of offline and online can unlock for retailers,” said Schneider. “The industry has faced a lot of challenges in the past year, and we have seen partners engaging with Zalando more deeply than ever.”
Schneider continues to run Zalando along with the company’s co-founder, Robert Gentz, following the decision announced by Rubin Ritter in December to resign as joint CEO. Gentz will be mainly responsible for strategy and business development, and Schneider for partnerships. In response to criticism that the top management team is all-male, Zalando said it has promoted Astrid Arndt to a new position as chief people officer. It has also created a new chief business and product officer role to be occupied by the current chief technology officer, Jim Freeman.