Zalando: revenue up, profit down – but the strategy’s working
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Zalando: revenue up, profit down – but the strategy’s working

Preliminary figures released on Wednesday showed that profit in online fashion seller Zalando’s third quarter has fallen due to aggressive investment in growth and expanding market share. Investors weren’t thrilled by news of lowered margins, but there is a positive take away from the news: sales are on their way up.

Revenues for the quarter are expected to come in somewhere between €1.06 billion and €1.08 billion. These figures translate into an incredible rise of between 27.5% and 29.5% from the year-ago quarter, and a 20% increase from the second quarter of this year. If those results don’t justify Zalando’s spending, nothing does.

Zalando’s share price has risen by 15% year to date

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SOURCE: Yahoo Finance

Zalando’s co-CEO Rubin Ritter clearly saw the increase in sales as the most important point to note in the preliminary figures, saying:

“We continue to push forward with our growth strategy at full speed, winning market share. Our results for the third quarter underline once again that our strong business expansion is driven by ongoing investments into our technology and logistics infrastructure, brand partner proposition and consumer experience.”

Mr. Ritter also announced that Zalando would be adding beauty products like cosmetics, skincare, and perfume to its platform early next year. He said: “The expansion into the beauty market is a natural next step and reflects the demand of our customers, with other markets set to follow after a successful ramp-up phase.”

Disclosure

Dominion holds Zalando in its Global Trends Luxury Fund.


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