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New brands help Zalando boost Q2 sales and profit

August 11, 2016 12:46 PM
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(Bloomberg)—Online retailer Zalando SE’s second quarter sales rose 25% to 916.4 million euros ($1.02 billion) from 733.0 million ($817.0 million) euros in the same period a year ago, in line with Zalando’s preliminary estimate. The online retailer also reiterated its forecast for full-year sales growth at the upper end of a 20-25% range.

The German apparel and accessories e-retailer, No. 7 in the Internet Retailer 2016 Europe 500, with estimated 2015 web sales $3.31 billion, also boosted second-quarter earnings as it added new brands like Kate Spade and got more bang for its marketing buck. Adjusted earnings before interest and taxes rose to 80.9 million euros ($90.3 million) from 30.2 million euros a year earlier, Berlin-based Zalando said Thursday. The company said July 19 that earnings would probably be in the range of 68 million euros to 88 million euros. Shares gained as much as 3.5%.

Zalando has seen its profitability dwindle in the past year as it increased spending to improve technology and attract customers. While the company spent more on marketing in the second quarter, the costs decreased as a proportion of revenue.

Zalando, which sells products like Nike sneakers and Armani coats, has broadened its assortment with brands like Fenty by Rihanna, Club Monaco and Kate Spade, No. 140 in the Internet Retailer 2016 Top 500 Guide. Those, in addition to an earlier Easter holiday and more targeted advertising campaigns, boosted sales during the quarter, said Claire Huff, an analyst at RBC Capital Markets in London.

For the quarter ending June 30, Zalando also reported:

  • Net income of 50.9 million euros ($56.8 million), up 121.3% from 23.0 million euros ($25.7 million) in Q2 2015.
  • 480.2 million site visits, up 16.6% from 411.8 million.
  • Mobile’s share of site visits was 64.7% compared with 56.6%.
  • 18.8 million active customers, up 14.6% from 16.4 million. Active customers are those who have made at least one purchase in the past 12 months.
  • 17.5 million orders, up 25% from 14.0 million.
  • Average order value of 66.2 euros ($73.84), down 1.8% from 67.4 euors ($75.17).

For the six months ended June 30, Zalando reported:

  • Sales of $1.7126 billion euros ($1.91 billion), up 24.4% from 1.3766 billion euros ($1.54 billion) in the same period a year ago.
  • Net income of 55.5 million euros ($61.3 million), up 17.3% from 47.3 million euros ($52.8 million).
  • 959.7 million site visits, up 19.3% from 804.6 million.
  • Mobile’s share of site visits was 63.5% compared with 54.7%.
  • 33.2 million orders, up 27.7% from 26.0 million.
  • Average order value of 66.4 euros ($74.06), down 1.9% from 67.7 euros ($75.51).
 

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