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Zalando profits dip in Q3 as stores reopen, mobile traffic hits 91%

Image courtesy of Zalando

German online fashion retailer Zalando has seen a profit dip in Q3 2021 as the pandemic-fuelled ecommerce boom has slowed and shoppers returned to physical stores to shop.

Meanwhile, its mobile traffic now accounts for 91% of site visits, up from 87% in Q3 2020.

Europe’s leading online fashion retailer grew its third quarter GMV by 25.3% year-on-year to €3.1bn, slightly above the company’s mid-term target growth corridor of 20-25%. Revenues grew in the same period by 23.4% to €2.3bn.

Zalando achieved an adjusted EBIT of €9.8m in the third quarter, corresponding to a margin of 0.4%, a more normalised level of profitability compared to the exceptional result recorded in the third quarter of 2020, says the company. Profitability, while lower in the third quarter 2021 are very much in line with the third quarter of 2019, which was the last third quarter recorded before the pandemic, says the company.

Strong customer acquisition and the continued positive development of existing customers have been key growth drivers. Zalando grew its active customer base by 30.1% year-on-year to 46.3 million by the end of the third quarter 2021.

Customers also ordered more frequently, with average orders per active customer reaching a new all time high at 5.1 orders over the past twelve months. Throughout the quarter, Zalando’s platform business developed strongly and grew faster than overall GMV growth.

The company successfully launched six markets in the second and third quarter of 2021 with locally tailored assortment, digital experience and convenience – including local payment, delivery and return options. Zalando continues the international roll-out of its subscription-based loyalty program Zalando Plus, enhancing the program for French customers and expanding to the Netherlands and Italy.

The retailer has also extended its partnerships with brands, most recently through more brand collaborations, for example with Adidas, Levi’s, Dr. Martens or The North Face.

In the third quarter, Zalando introduced new business practices for circularity along the full product lifecycle, from developing design standards to investing in new recycling technologies. Paying into its sustainability goal of applying the principle of circularity and extending the life of at least 50 million fashion products by 2023, Zalando has for example grown its pre-owned offer tenfold from 20,000 to now over 200,000 articles in one year.

Robert Gentz, Zalando Co-CEO, says: “Throughout the year we progressed strongly across all areas of our strategy, always keeping our focus on our long-term vision to be the Starting Point for Fashion and build a truly sustainable platform business with more than 30 billion euros in GMV by 2025. We are looking confidently ahead into 2022, with several strategic initiatives in the pipeline that will excite customers and partners alike and push our sustainability agenda further forward.”

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