Online fashion retailer Zalando today announced revenue growth of over 20% and higher profits for the fourth quarter of last year and for 2017 as a whole, and committed itself to investing more on logistics and delivery services during 2018, including in Italy.
The German company, which is expanding in various European markets, increased revenues by between 21% and 23% to €1,323-1,345 million in Q4, 2017, according to preliminary figures. For Q4, it expects to achieve an adjusted EBIT of €107-120 million, corresponding to an adjusted EBIT margin of 8.1-8.9%, compared to €95.6 million and an 8.8% margin in Q4, 2016.
In the fiscal year 2017, Zalando achieved preliminary results in line with its guidance. Revenues grew by 23.1-23.7% to €4,478 – 4,500 million, while adjusted EBIT is expected to come in at €209-222 million, which would be a margin of 4.7-4.9%. In 2016, the company had adjusted EBIT of €216.3 million, which was a 5.9% margin. Full 2017 results and 2018 guidance will be announced on March 1.
Co-CEO Rubin Ritter said: “We pulled off a strong finish to the year, despite a challenging October. In 2017, we delivered on our promise of profitable growth. We are excited to continue on this path also in 2018 and beyond. Our focus will remain on strong market share gains, facilitated through continued investments.”
Zalando, which is active in 15 European markets (Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Poland and the UK), plans to keep spending heavily to expand its logistics network this year.
At present, it has five centrally located fulfilment centres, with three in Germany (Erfurt, Mönchengladbach and Lahr) and two in Poland (Gryfino close to Szczecin and Gluchow close to Lodz). These are supported by smaller warehouses in Germany, northern Italy, France and Sweden with a focus on local customer needs.
During 2017, Zalando opened the 130,000 sqm Gryfino site, a 20,000 sqm logistics centre serving Paris and a 30,000 sqm near Stockholm serving Nordic markets. Developer Goodman also started construction work on the second Zalando fulfilment hub in Poland at Gluchow near Lodz. This 130,000 sqm centre is due to go into operation in late 2018, serving southern Poland and parts of Germany and Austria.
In spring 2018, the e-retailer will start building a Southern Europe fulfilment hub at Nogarole Rocca, close to Verona, in northern Italy, in cooperation with developer Vailog, part of the British SEGRO group. The 130,000 sqm centre, to be operated by a logistics partner, will create over 1,000 new jobs, strengthen service for Italian customers and speed up deliveries in Southern European markets.
Giuseppe Tamola, country manager for Italy, said last August, when the plan for a fulfilment hub in Italy was first announced: “The Italian online market is growing rapidly, driven by increasingly enthusiastic and attentive consumers. This additional major investment allows us to go beyond what we have done to date, and potentially to introduce elements of innovation for the benefit of our customers as well as our brand partners.”
In addition, the fashion retailer will extend its existing fulfilment centre at Stradella, near Pavia, with its partner Fiege this year. Two more halls will be added, doubling space to about 40,000 sqm, and increasing the number of employees to over 550. Fiege, which has run the Stradella site since it opened in late 2015, will continue to do so in the enlarged premises.
“The extension of Stradella is part of our strategic development plan to grow our activities in Italy and in other Southern European markets, focusing on a continuous improvement of the service offered to our clients,” said Jan Bartels, VP Customer Fulfillment & Logistics at Zalando.
Meanwhile, Zalando has also continued to offer new delivery services. In December, it launched the ‘Zalando Plus’ service, offering ‘Returns on Demand’ in Germany in cooperation with Hermes. Zalando Plus members can choose a two-hour window and have their returns picked up at their preferred location.
For deliveries, Zalando relies on different partner carriers to provide a mix of next-day, same-day and returns services. Key partners include DHL Parcel and Hermes in Germany, Hermes in the UK, UPS in Italy and postal operators in most other countries. In the medium-term, Zalando aims to offer next-day deliveries to 75% of the European population by 2020 as it continues to expand its logistics network and offer more delivery options. The company offers free delivery and returns.
Zalando describes itself as “Europe’s leading online fashion platform for women, men and children” offering clothes, shoes and accessories from about 2,000 different international brands as well as private label products.
