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Strong growth as Zalando refines strategy

Etailer Zalando has reported 24.6% revenue growth to €1.7bn (£1.5bn) for the final quarter of 2018 as it refines its platform strategy to target an annual gross merchandise volume (GMV) of €20bn (£17bn) by 2023/24.

After a challenging third quarter, the German etailer grew its customer base by 1.3 million people in the final three months of the year. It now has 26.4 million active customers – accounting for 6.5% of the European population.

Revenues grew by 20% to €5.4bn (£4.6bn) in the year to 31 December, co-CEOs Rubin Ritter, David Schneider and Robert Gentz announced at the company’s first annual press conference, held at its new headquarters in Berlin today.

Adjusted group EBIT grew by 47% compared with the previous year to €173.4m (£148.6m), and gross GMV grew by 21.1% to €6.6bn (£5.7bn).

At the conference, the chief executives discussed the etailer’s future strategy. For 2019 the outlook is to increase GMV by 20%-25% at the lower end of the range, and produce an adjusted EBIT of between €175m (£150m) and €225m (£192m).

By 2023/4 the company is targeting €20bn (£17bn) in GMV as it further refines its platform strategy.

Zalando said that, as Europe’s most-visited online fashion destination, it currently serves 1.5% of the market. By 2030, the ambition is to serve more than 5%.

“We aim to be this one fashion destination where a customer can fulfil all their fashion needs,” said Schneider. “In our customer’s head, she should think if it’s not on Zalando – it doesn’t exist.”

Zalando currently works with around 2,000 brands, something that the company is measured about expanding.

Schneider said: “We want to make Zalando to be the starting point for fashion, but that doesn’t mean we have to capture every fashion item ever. It’s rather that we want to have everything that is relevant to our specific customer.”

Developing the Partner Programme – an online concessions model – is a large part of the ongoing strategy, and Zalando now offers marketing and fulfilment services to brands.

“By connecting brands with our platform, they can focus on what they are good at and leave the operational part to us, freeing up a lot of capital for them,” said Gentz. “We can offer easy ordering to customers through strong partnerships with our fashion brands, connecting their warehouses with our customer reach and servicing our infrastructure to them.”

The company will continue to invest into logistics and technology and plans capital expenditure of around €300m (£257m) for 2019.

Zalando will expand its board at the start of April to include the new roles of chief financial officer and chief technology officer, which will be held by David Schröder and Jim Freeman respectively.

Schneider, Ritter and Gentz have also adapted their responsibilities in an effort to reach their targets. Schneider will focus on brand partners and lead Zalando’s fashion offer, while Ritter assumes responsibility for the overall strategy of the company. Gentz will take on marketing and sales, and maintain his responsibility for human resources.

Zalando’s new headquarters in Berlin will open in April. 

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