Zalando Sees Strong Demand and Fewer Returns

BERLIN, Germany — German online fashion retailer Zalando SE on Tuesday reported a big jump in brands using its logistics services, while a decline in returns due to pandemic-related shifts in shopping patterns helped bolster profitability.

Zalando said adjusted operating profit more than doubled to €212 million ($249 million) on a 27 percent rise in revenue to €2.03 billion, around the mid-point of the results range it announced last month, when it hiked its full-year forecast.

Europe's biggest pure online fashion retailer said the number of active customers rose a record 20 percent to 34.1 million, with an increasing number of first-time buyers as well as male shoppers. The average order, or basket, size ticked up slightly to €56.9 after several years of declines.

Zalando's shares, already up more than 50 percent this year, had risen by 3.2 percent by 08.27am GMT.

The improved basket size, calculated after taking into account items sent back, was helped by a high single-digit improvement in the return rate, which also fed through to the bottom line, finance chief David Schroeder told journalists.

Customers are buying fewer outfits for special occasions and more casual wear and beauty products that are less likely to be sent back, Schroeder said, adding that new customers are also less likely to return goods.

German e-commerce site Otto has also flagged a 5 percent fall in its returns rate during the pandemic as customers opted for products such as lingerie, home textiles and basic fashion.

Zalando assumes the fall in returns will be temporary, but the company is making progress on initiatives to limit the number of items sent back because they are the wrong size, Schroeder said.

British rival Asos last month said sales rose 10 percent in the four months to June 30 and it remained cautious on the short-to-medium term demand outlook due to restrictions on social events and an uncertain economic outlook.

Zalando's profitability is also being helped as it shifts from being an online seller to offering brands logistics and marketing services under its partner programme.

The company said it had signed up a record 180 brands to the programme in the quarter, including Swarovski jewellery and K-Swiss tennis shoes, with the volume of items shipped through its fulfilment solutions up 180 percent.

By Emma Thomasson; editors: Thomas Seythal, Aditya Soni and Kirsten Donovan.