Zalando sees strong Q3 as demand rises but returns stay low

By

Sandra Halliday

Published
Oct 9, 2020

Zalando enjoyed a strong third quarter, helped by a lower returns rate, with the German e-commerce giant saying it’s able to raise its outlook for the full year as a result.

It saw “exceptionally strong and profitable growth” in Q3 and now expects gross merchandise volume (GMV) to grow between 25% and 27% for the year. Meanwhile, revenues to should grow 20%-22% and profit on an adjusted EBIT basis should be €375 million-€425 million.

Back in July, it had forecast GMV up 20%-25%, revenue up 15%-20% and adjusted EBIt of €250 million-€300 million.

So what exactly happened in Q3? The company won’t release its final Q3 results until next month and didn’t have final figures but said GMV was up between 28% and 31% to €2.43 billion-€2.48 billion. And revenues rose 20%-23% to €1.83 billion-€1.87 billion. Adjusted EBIT for the quarter should be between €100 million and €130 million.

The company said it saw a “continued very strong and successful execution of the Zalando platform strategy, against the backdrop of an accelerated consumer demand shift towards digital offerings in the course of the corona pandemic [that] positively impacted [its] strong development.”

And like a number of e-tail pureplays and omnichannel retailers globally it also highlighted the “continued lower return rate”. It seems that during lockdowns and after them, consumers have been buying in a more focused way and returning fewer items, which gives retailers better inventory visibility and cuts their costs.

The company added that it enjoyed a substantial one-off effect caused by the reversal of the exceptional write-down of inventories. These had been booked in March, and at the time it hadn’t expected the “fast and sustained recovery of consumer demand” that it has subsequently seen.