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Zalando to add five warehouses as ecommerce booms

By Reuters

BERLIN (Reuters) -German online fashion retailer Zalando said on Thursday it will add another five warehouses to its network of 10 by 2023 as it raised its outlook again for the full year after strong first-quarter sales and profits.

Quarterly sales soared 47% to 2.24 billion euros ($2.69 billion), while operating profit came in at 93.3 million, helped by a continued lower return rate – a trend that started when shoppers were confined to home during coronavirus lockdowns.

Europe’s biggest online-only fashion retailer recorded its strongest customer growth in eight years, to reach 41.8 million active customers.

Zalando shares, which have almost doubled in the last year, were flat at 0742 GMT, while the German mid-cap index was up 0.3%.

The return rate was helped by the influx of new customers, who typically return less, customers shopping for essentials like kidswear and cosmetics rather than party dresses, and reduced mobility, said finance chief David Schroeder.

“We expect a return to ‘new normal’ in the second half,” Schroeder told journalists, noting that Zalando was still forecasting annual growth of up to 25% for 2022 to 2025.

British rival ASOS last month reported a 25% jump in first-half sales, but was cautious on the short-term outlook due to concerns about the economic prospects of its young customers.

To help it reach its ambition to capture more than 10% of the European fashion market, Zalando said two new warehouses in Rotterdam and Madrid would go live this year and it would start building three more in France, Germany and Poland.

The addition of the new warehouses will allow it to reach a gross merchandise volume (GMV) – sales on its site made by the company or its partners – of 18 billion euros, Schroeder said, up from the 10.7 billion euros it recorded in 2020.

Zalando said late on Wednesday that it now expects revenue to grow 26-31% in 2021, up from a previous forecast for 24-29%, and it expects operating profit of 400-475 million, up from a previous 350-425 million.

It also launched a share buy-back programme of up to 200 million euros, starting on May 7.

($1 = 0.8331 euros)

(Reporting by Emma Thomasson;Editing by Caroline Copley and Emelia Sithole-Matarise)