Zalando quarterly profits jump in core markets

Zalando, Europe's biggest pure online fashion retailer, reported a big jump in second-quarter profitability in its core business in Germany, Austria and Switzerland as investments in logistics and marketing paid off.

Zalando said second-quarter adjusted earnings before interest and taxation (EBIT) almost tripled to 80.9 million euros (69.4 million pounds) on revenue up 25 percent to 916 million euros, compared to analyst consensus for 78 million and 918 million respectively.

Revenue growth slowed in Germany, Austria and Switzerland to 14.7 percent from 32.5 percent a year ago, but the adjusted EBIT margin for the region quadrupled to 13.9 percent, while it was a steady 4.1 percent for the rest of its business.

Zalando said the main driver behind the jump in profitability was strong operating leverage that compensated from big investments in technology, logistics and marketing.

Zalando's shares had come under pressure this year as investors expressed fears it is more exposed to Amazon's foray into fashion than British rival ASOS, but they jumped last month when it reported strong preliminary figures.

Zalando had also raised its guidance for the full year adjusted EBIT margin to 4.0-5.5 percent from 3.0 to 4.5 percent and reiterated a forecast for full-year sales to grow at the upper end of a 20 to 25 percent range.

Asos and smaller British online fashion retailer Boohoo.com Plc have both raised their full-year sales growth forecasts due to robust demand through the summer and spring.

Zalando said the number of active customers grew to a record 18.8 million by the end of the quarter, with each active customer making an average of 3.3 orders per year.