Reporting from Zalando’s Insights day in Berlin

28th Aug 2014

Zalando presents its first half results

Zalando HQ in Berlin. Photo credit: My-Retail Media

An initial public offering may be the only thing on the press’ mind, but a trip to Zalando HQ as it announces another stellar first half shows there is a lot more going on behind the scenes. Whether an IPO is on the cards or not, it seems the endless questions have turned into an in-joke for founder David Schneider and members of the management team, as they tell press they will not be answering any questions on the possibility of a share debut. Rubin Ritter, a member of the Zalando management board, simply stated:

“Our position remains the same- [an IPO] is an option for the company but there’s nothing more to say on it.”

And in some respects, it is a shame to only focus on achieving what would, admittedly, be an enormous milestone for the German online fashion giant, with such impressive results to announce today.

The first half saw Zalando, which is only six years old, grow its group revenues by 29.5 per cent versus the previous year to EUR 1.047 million, while sales passed EUR 1 billion for the first time, reaching EUR 1.047 billion in the first half.

The brand that relatively few UK consumers are quite aware of yet has spent the last few years expanding at a rate rarely experienced across Continental Europe, and has set its sights firmly on becoming the largest consumer destination for fashion.

So what of this e-commerce giant quietly gaining ground across the Channel? While the management board are reluctant to discuss their future stock options, My-Retail Media finds the retailer on fighting form. For the first time, Zalando reports positive EBIT margin for the first half of the year, up 1.2 per cent. Ritter puts this down to four major points in the company’s strategy: reducing costs of sales by improving margins, investments into fulfilment finally paying off, an established customer base that doesn’t need to be marketed to as much as before, and the ability to scale up its operations, so the need for new admin will reduce over time.

Zalando’s focus, for now, remains squarely on Continental Europe. With a preference on invoicing after delivery, Germany has lagged behind the UK and US in its take up of internet shopping, and Zalando is largely credited with changing this culture. It’s a focus it plans on maintaining, and it will be keeping Germany, Austria and Switzerland (a region it refers to as DACH) as its main priority. Certainly, while the UK no doubt remains an enticing option for the company in the long term, it doesn’t sound as if Zalando will be gearing up for a head-to-head with Asos anytime soon.

“Frankly the UK is not our home turf and in the past we have not concentrated on that market,” Schneider told press this morning. Describing Asos’s highly focused offer as “complimentary” to Zalando, Schneider added: “It’s going well [in the UK], and everything we are doing now will improve what we do [there], but we have a Continental Europe focus and broad approach… although at Zalando, we never say ‘you don’t do anything’.”

Zalando seems to have decided European domination will keep it busy enough for now, with operations currently tailored to 15 countries, with over 1500 brands on offer and 13.5 million active customers as the end of the first quarter in 2014. An upcoming tie-up with Topshop, mentions of something similar with Mango and American Apparel, plus a newly made-over website, new packaging design and a new marketing strategy shows the company is keen not to rest on its laurels as the continent’s biggest online retailer. It may not have quite made it to saturation point in the UK yet, but that doesn’t seem to be something Zalando needs to worry about it the slightest.

Ava Szajna

My-Retail Media

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