Zalando Confirms Earnings Boost From Efficiency, New Brands

  • Web retailer broadens assortment with Club Monaco, Kate Spade
  • Second-quarter sales rise 25 percent from a year earlier

Zalando SE boosted second-quarter earnings as the online apparel retailer 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. The shares gained as much as 3.5 percent.

Zalando has seen its profitability dwindle in the past year as it increased spending to improve technology and attract customers. Investor concern was eased when it raised its full-year margin forecast to 4 percent to 5.5 percent last month, lifting the range from 3 percent to 4.5 percent.  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. 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.

The operating profit margin widened to 8.4 percent. Sales rose 25 percent to 916.4 million euros, 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 to 25 percent range.

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