Zalando today set out plans for expanding its fulfilment network and services, while improving its sustainability, as it reported a 30% rise in sales in its latest financial year.
The fashion and lifestyle platform says customer numbers grew by more than 10m as it expanded to six new markets. But it warned that war in Ukraine could have an impact on its results for the coming financial year.
Zalando today reports revenues of €10.4bn (£8.7bn) in 2021. That’s 29.7% up on the same time last year, while the gross merchandise value (GMV) of goods sold on its platform – including by third-party brands and retailers – grew by 34.1% to €14.3bn (£11.9bn). Some 30% of its fashion GMV is from third-party brands and retailers, and Zalando is targeting 50%. Net income of €234.5m (£195.4m) was up from €226.1m (£188.4m) a year earlier.
Robert Gentz, co-chief executive at Zalando, says: “We are very pleased with our strong results, which demonstrate that we have the right strategy in place to succeed irrespective of the market environment. Our new customer growth and strategic progress in 2021 underline the immense opportunity ahead of us. Leveraging our platform business model, we are in a strong position to achieve our GMV goal of more than 30 billion euros (£25bn) by 2025. We would like to thank the entire Zalando team for their commitment and flawless execution working towards that goal.”
In 2022, Zalando wants to outperform the European online fashion market in what it describes as a “volatile market environment”. It expects GMV to grow by between 16% and 23% to between €16.6bn (£13.8bn) and €17.6bn (£14.7bn), while revenue is expected to grow by between 12% and 19% to €11.6bn (£9.7bn) and €12.3bn (£10.25bn). It also predicts that earnings before interest and tax willl come in at between €430m (£358.2m) and €510m (£424.9m). However, those expectations do not take into account “a potential negative impact from the war in Ukraine”.
The full-year 2022 forecast represents a slowdown compared to the year just gone, says Emily Salter, senior apparel analyst at data and analytics company GlobalData. This, she says, is “akin to that experienced by other online pureplays like ASOS and the boohoo group, which has contributed to the decimation of their share prices over the last year.”
Growing customer numbers
In the last year, Zalando says it attracted more than 10m new customers, taking it to a total of 48m active customers who placed an average of 5.2 orders during the year. Its Zalando Plus membership programme now has more than a million members. By the end of 2023 the company plans to make Zalando Plus available in twice as many markets as it is now – growing from four, including the Netherlands, France, and Italy to eight. Zalando says that Plus members, who subscribe for fast delivery, visit Zalando twice as often and spend three times more than other customers.
The growth in customer numbers came as Zalando expanded to six new markets – Croatia, Estonia, Latvia, Lithuania, Slovakia and Slovenia – taking it to a total of 23 markets.
Zalando says it already operates one of the largest online fashion logistics networks in Europe, with 12 fulfilment centres in seven countries. It will add a further four over the coming year as it invests up to €500m (£416.5m) in capital expenditure. At the same time, it will open its fulfilment solutions to partners selling direct to consumers. David Schröder, chief operating officer at Zalando, says: “Zalando creates benefits for both our partners and customers. Our partners gain access to over 48 million active customers and our customers can easily find their favorite local and international brands. To enable strong sustainable growth in the future we will continue to invest in scaling and innovating our unique capabilities and infrastructure.”
GlobalData’s Salter says Zalando’s increasing focus on its third-party partner programme will be “beneficial for Zalando as competition in the multi-brand retailer sphere remains fierce, and as brands such as Nike and Adidas cut ties with partners to focus on their direct-to-consumer operations—with the Very Group announcing it will lose all Nike products from September 2023.
“Since Zalando’s success rests on its branded offer, it must keep on the good side of brands through initiatives such as the Partner Program.”
The retailer and marketplace also signalled a shift from plastic to paper shipping bags as part of its transition to be a sustainable fashion platform with a net positive impact. It says 21.6% of its GMV was on sustainable products, up from 16% in 2020. In 2022, it aims to improve packaging while reducing waste and empty space in parcels.