Zalando moves into the black for the year

Zalando made an annual operating profit at group level for the first time last year, and not only in Germany where it had already become profitable before.

According to preliminary figures, the big German-based e-tailer booked an adjusted operating margin (Ebit) of 3.7 percent of sales, before extraordinary items, versus a negative 6.2 percent margin in 2013, as total sales grew by 26 percent to €2,214 million.

Sales increased by 17 percent to about €1.23 billion in the German-speaking countries, generating an adjusted margin of 6.7 percent. They jumped by 37 percent to €900 million elsewhere in Europe, where the negative Ebit margin was reduced to 1.3 percent.

At the end of 2014, Zalando had 14.7 million active customers in 15 countries, 600,000 of whom registered during the fourth quarter. The average purchase basket rose last year by 6.6 percent to €66.60 and included sports products.

Thanks in part to lower marketing expenses, which have been lowered to 13.2 percent of revenues, the Ebit margin reached 9.9 percent in the fourth quarter, while sales growth declined to 21 percent. On a quarterly basis, Zalando had already generated a positive operating margin of 2.4 percent in the same quarter of 2013, but it was higher this time.

The management feels that these performances indicate that Zalando's business model is sustainable.

The management expects to keep the same margin this year on 20 to 25 percent higher overall sales, concentrating on better services for end consumers.

Meanwhile, Rocket Internet, the biggest shareholder in Zalando with a stake of around 32 percent, has announced a 7.8 percent capital increase intended to raise net proceeds of almost €589 million through the issue of about 12 million new shares. One of its biggest shareholders, the Swedish Kinnevik investment group, will not participate in the equity increase, so its stake in Rocket Internet will decline from 14.2 percent to 13.15 percent. Other shareholders, including Baillie Giffort and United Internet, have announced their participation in the new round of funding.