Zalando SE's revenues grew 41 to 43 percent to €707-717 million in the third quarter compared with the same period in 2014, according to preliminary figures released by the European e-tailer Thursday.

Zalando, which is based in Berlin, Germany, expects to achieve an adjusted EBIT of -€8 million to -€32 million, corresponding to an adjusted EBIT margin of -2.5 to -4.5 per cent (Q3 2014: -€4 million, or 0.8 per cent).

In the first nine months of 2015 Zalando achieved revenues of €2.08-to-€2.09 billion, growing by around 35 per cent (first nine months 2014: €1.55 billion). Adjusted EBIT for the first nine months is expected to come in at €27-41 million, a margin of around 1.6 per cent at the mid-point of the range.

“The results are in line with our strategy to invest into long-term growth,” said Rubin Ritter, a member of Zalando's management board. “In the third quarter we saw unique growth opportunities to significantly beat our growth targets and tapped into these with full conviction. We remain committed to our profitable growth path, but are willing to trade in some profitability to accelerate our growth and gain market share.”

Zalando continued to invest in its customer proposition in the third quarter, driving revenue growth significantly above expectations at the expense of margin.

While gross margin was in line with the prior year, profitability was mainly impacted by higher fulfillment and marketing costs:

  • Fulfillment cost: higher than usual fulfillment cost to secure a first-class customer experience even at fast-growing volumes, plus significant technology investments to further drive Zalando’s mobile and platform strategies. Fraud cases in the first-half of 2015 triggered lower than expected debt collection rates, representing a single-digit million amount.
  • Marketing cost: higher marketing cost ratio year-on-year, driven by increased investments into app downloads plus an earlier fall-winter season start campaign compared to last year.

Zalando raises full year growth guidance

Following these strong results in the first nine months of the year, Zalando is now expecting to substantially exceed its initial 2015 revenue growth corridor of 20-25 per cent and revised guidance of 28-31 percent and is increasing its guidance to 33-35 per cent. As a result of additional growth investments, guidance for 2015 adjusted EBIT margin is lowered to 3-4 per cent.

All figures reported herein are preliminary and unreviewed. Full financial disclosure for the third quarter will be published on Nov. 12.

Zalando offers free delivery and returns on more than 1,500 international apparel, footwear and accessories brands, including dozens of global athletic and outdoor brands, as well as its  own private label products. It curates its offering to the  preferences of customers in each of the 15 European markets we serve: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Poland and the United Kingdom. Zalando’s shops attract over 135 million visits per month. In the second quarter of 2015, around 57 percent of traffic came from mobile devices, resulting in close to 16.4 million active customers by the end of the quarter.