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Zalando acts to combat coronavirus impact

Zalando has introduced financial initiatives to support fashion brands and retailers during the coronavirus crisis, despite reporting a loss in the first quarter of 2020.

In the first three months of 2020, Zalando reported gross merchandise value growth in the range of 13.1%-14.3%, €1.98bn-€2bn (£1.62bn to £1.74bn), compared with €1.75bn (£1.5bn) in the same period in 2019. Group revenues grew by 10.1%-11.6% to €1.52bn-€1.54bn (£1.33bn-£1.34bn), compared with €1.38bn (£1.20bn) in 2019. 

However, the group said it expected an adjusted EBIT in a range of -€90m to -€110m (-£78m to -£96m), as a result of lower sales growth in the first quarter and an exceptional inventory writedown of €40m (£35m) as a result of the revised sales expectations for the current season. This compares with positive EBIT of €6.4m (£5.6) in the first quarter of 2019.

The etail platform has put in place measures to help the brands it sells to improve liquidity, clear overstock and launch or expand direct-to-consumer business. 

Until the end of June, partners in need of immediate cash relief will benefit from faster pay-out terms. Zalando also said it was improving the visibility of small to midsize partners in its shop.

During Easter weekend, Zalando, which is based in Germany, and operates in European markets including UK, Italy, Switzerland, Sweden, Denmark, Finland, Norway, Belgium, Spain and Poland – said brands in its partners programme sold more than 1 million items – more than double last year.

The company has also initiated measures to help brick-and-mortar retailers during the lockdowns in Europe. Until 31 May, partners in the Connected Retail programme can sell on the platform without paying commission fees. This led to around 35,000 items sold by brick-and-mortar stores over Easter weekend. 

Zalando said it was adding textile face masks to its assortment in the coming weeks, and would donate all profits generated from the sales. 

The group said it had “access to a current cash position of around €1.03bn [£900m] (as of 31 March), which allows it to invest through-cycle even in this challenging time”.

Kenneth Melchior, director for northern Europe, UK and Ireland at Zalando, said: ”Based on the conversations we have had with our partners in recent weeks, we know that our platform can make a significant difference for both fashion brands and retailers. That’s why we will now offer a faster and free integration to our platform to support existing and potential partners during the crisis.” 

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