German Online Retailer Zalando Quarterly Sales Gain 35%

Zalando AG, Europe’s largest online shoe and fashion retailer, reported a 35 percent gain in first-quarter sales, increasing the spotlight on the German company ahead of a potential initial public offering.

Revenue for the period ended in March was 501 million euros ($693 million), compared with 372 million euros a year earlier, the company said. The pace was affected by adverse weather conditions, the company said, and was slower than the rate for all of last year.

“We don’t expect to hit break-even this year,” said Chief Executive Officer Rubin Ritter. “We have always shared the view with our investors that we are interested in building a long-term growth company.”

The company’s gross operating margin improved, though it remained negative, as Zalando ironed out process problems in distribution and spent less per euro of revenue to attract new customers, Ritter said.

Zalando, backed by Germany’s Samwer brothers, last month hired law firm Freshfields Bruckhaus Deringer LLP to prepare for an IPO, according to people familiar with the matter. In February, Zalando said last year’s revenue rose 52 percent to 1.76 billion euros. The operating margin improved by about 0.5 percentage point from minus 7.2 percent in 2012.

Other investors in Zalando include Sweden’s Investment AB Kinnevik (KINVB), Russian billionaire Yuri Miller’s DST Global LP, JPMorgan Chase & Co. and Quadrant Capital.

To contact the reporter on this story: Aaron Ricadela in Frankfurt at aricadela@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Kim McLaughlin

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