Zalando expects profits at lower end of target range

The online fashion retailer is expecting adjusted EBIT for the year at the low end of its €220-€270m (£200m-£240m) target range and sales growth in the lower half of its target of 20-25%.

During the second quarter Zalando recorded 29m orders, the highest number in a single quarter. The retailer’s active customers also increased by 15.9% to 24.6m. Customers ordered more than four times per year, in an all-time high.

Zalando grew revenues in the second quarter by 20.9% to €1.33bn (£1.19bn) in the quarter, while it recorded an adjusted EBIT of €94m (£84m) during the period.

It has revealed profits are being held back because of changing shopping habits, which includes a decline in the average basket order size as customers order more frequently.

Zalando also attributes a declining basket size to people increasingly ordering on a mobile device because they order less on smartphones than on a computer.

In its second quarter, the average basket size at Zalando declined 6.4% year on year to €60.40 (£54). The sales mix and gross margins were also impacted by the heatwave across Europe.

Zalando co-chief executive Rubin Ritter said: “The strong development in customer KPIs shows that our engine is running extremely well.

“We’re excited to see that our customer-centric focus is paying off, despite a continued challenging fashion market environment.”

Ritter expects discounting at the end of the summer season will be more pronounced due to the heatwave in Europe.