German online retailer Zalando reported a solid Q3 performance, with revenue rising 5.0 percent to €2.4 billion, and adjusted Ebit increasing sharply from €23.2 million to €92.7 million, resulting in an adjusted Ebit margin of 3.9 percent. Gross merchandise volume (GMV) grew 7.8 percent to €3.5 billion. Zalando’s active customer base increased by 500,000, bringing the total to 50.3 million in the third quarter.
“Customers appreciate the quality brands we’re introducing, spend more time engaging with our digital content, and value our expanding lifestyle offerings in Sports, Beauty and Kids & Family,” said Dr. Sandra Dembeck, CFO. “To capture further growth, we are investing in loyalty programs, enhancing content, expanding our tech hub in China, and strengthening our European logistics network.”
B2C revenue growth driven by new brands and loyalty enhancements
In the B2C segment, revenue grew by 4.3 percent to €2.2 billion compared to the previous year, with adjusted Ebit increasing to €86.7 million, yielding an adjusted Ebit margin of 4.0 percent compared to last year’s 0.5 percent. Key drivers included enhanced gross margins and lower logistics costs.
Zalando continued to differentiate itself by offering quality brands like Remain, A-Cold-Wall and Marine Serre in its curated selection. Additionally, the company revamped its Plus loyalty program, shifting from a paid membership model to a free, points-based system to reward customer loyalty.
The company also invested in new warehouse infrastructure near Paris, enhancing localized service in France and neighboring countries. Strong demand in the Sports, Beauty and Kids & Family categories further contributed to B2C growth, supported by customized inspiration elements and a high level of convenience.
B2B expands as platform partnerships flourish
In its B2B segment, Zalando supports brands and retailers by offering logistics, software and services that enhance their e-commerce operations, regardless of whether sales occur on or off the Zalando platform. ZEOS, the company’s logistics and fulfillment service, added Asos as a distribution partner, allowing it to process orders across nine major e-commerce platforms and brand websites.
The B2B segment achieved revenue growth of 11.1 percent, reaching €239.7 million, though adjusted Ebit declined from €12.6 million last year to €6.7 million this quarter due to upfront investments to support future growth.
Outlook
Zalando raised its outlook for FY2024 provided on Oct. 10, 2024. The company expects GMV growth between 3 and 5 percent, revenue growth between 2 and 5 percent, and adjusted Ebit between €440 and 480 million.
