Zalando third-quarter sales soar but rising costs hamper earnings

Zalando said sales in the three months to the end of September jumped to €713.1m (£503.2m) from € 501.4m (£354m) the prior year. Sales growth in its third quarter last year was 24.2%.

The Berlin-based online fashion retailer, which operates in 15 European markets, said it “significantly” grew market share in the period and is on track to record €3bn (£2.1bn) of sales for its full year. It will also have about 10,000 employees by the end of its financial year.

Sales in Germany, Austria and Switzerland rose 34.4% in the quarter to €371.2m (£262m), while sales in other regions climbed 52.1% to €300.8m (£212.3m).

However, pre-tax losses in its third quarter widened to €34.1m (£24.1m) from € 1.8m (£1.3m) the year before.

Zalando blamed rising fulfilment and marketing costs for the losses.

Fulfilment costs rose owing to “continued investments into the customer proposition and technology”, the etailer said.

In September, Zalando revealed it was piloting a 60-minute returns service.

Marketing costs increased after an early start to the winter season, which forced Zalando to discount summer products and bring forward marketing plans. It also increased spend on app downloads.

On a nine-month basis, however, Zalando’s pre-tax profits came in at €21.2m (£15m) from €200,000 (£141,000) the previous year.

Zalando’s joint-chief executive, Rubin Ritter, said: “Our accelerated growth is driven by very strong customer metrics, so we are clearly making the right investments.”

Looking ahead, he added: “We are confident that we will deliver a unique combination of fast growth and clear profitability for the full year, which is also the right path for us going forward.”