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Zalando projects 20-25 percent revenue growth in 2018

By Prachi Singh

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Business

In 2017, Zalando SE grew revenues in the upper half of the guided 20-25 percent range by 23.4 percent to 4,489 million euros (5,479.4 million dollars). The company has said that it expects to outpace the European online fashion market by growing revenues 20-25 percent in 2018, adding about 1 billion euros (1.2 billion dollars) in revenues at the midpoint of the range. The online fashion platform also aims to increase adjusted EBIT to 220-270 million euros (268.5 to 329.5 million dollars) or a margin of around 4-5 percent.

Commenting on the company’s performance and outlook, Zalando Co-CEO Rubin Ritter said in a statement: “In 2017, we made significant headway and won market share in all our markets. In 2018, we will target our 20-25 percent growth corridor for the fourth consecutive year, underlining our conviction that focus on growth and market share wins is the right path to maximize long-term value.”

Zalando experiences revenue growth across regions

The company said, revenue growth in the DACH region re-accelerated by 18.3 percent to 2,145.6 million euros (2,619.7 million dollars) and grew by 25.7 percent to 1,973.6 million euros (2,409 million dollars), as well as in the by 45 percent in other segment to 369.9 million euros (451.6 million dollars).

Zalando said that the revenue growth was mainly driven by a larger customer base and increased order numbers. The customer base grew strongly from 19.9 million in 2016 to 23.1 million active customers at the end of 2017, adding 3.2 million active customers over the year. The larger customer base also ordered more frequently, with the average number of orders per active customers rising to an all-time high of 3.9, up from 3.5 in 2016.

The company recorded an adjusted EBIT of 215.1 million euros (262.6 million dollars) in 2017, resulting in a margin of 4.8 percent. With a net income of 101.6 million euros (124 million dollars), Zalando added that the company remains sustainably profitable. The investments made by the company saw the ramp-up of new fulfillment centers in France, Italy, Sweden, Poland and Southern Germany.

Zalando continues investing to drive growth

To enable growth, Zalando said, it will continue to invest in assortment, digital experience, convenience, and emerging businesses. The company will expand its assortment with new brands like Swarovski or Massimo Dutti, as well as by launching the beauty category by the end of March. This year, Zalando plans to enter two European markets adjacent to its existing markets.

The further expansion and automation of Zalando’s logistics footprint, the company plans the construction of fulfillment hubs in Lodz (Gluchow) and Verona (Nogarole Rocca), the ramp-up of Szczecin (Gryfino), and the satellite warehouse in Stockholm (Brunna), as well as further automation in Lahr. Zalando added that the company will create about 2,000 additional jobs this year, most of which in Berlin.

Picture:Facebook/Zalando

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