Nov 12, 2015
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Zalando sales soar as new brands launched

Nov 12, 2015

Europe's biggest dedicated online fashion retailer Zalando saw quarterly sales growth accelerate and said it was aiming to reach almost 3 billion euros ($3.2 billion) for the full-year after it launched new brands and speeded up delivery.

Zalando said third-quarter revenue rose 42.2 percent to 713.1 million euros, although it slipped to an adjusted loss before interest and tax (EBIT) of 23.5 million euros from an operating profit of 3.8 million a year ago.

Launched in Berlin in 2008, Zalando competes with the likes of Britain's ASOS and serves customers in 15 European markets with over 1,500 brands, including big names like Gap , Banana Republic and Topshop added in the last year.

Zalando's shares, which floated at 21.50 euros a share in October last year, were up 2.3 percent at 31.65 euros at 0838 GMT. The stock had already erased losses they took last month when Zalando indicated it would make a loss in the quarter.

"This set of results suggests that Zalando continues to gain share," Bernstein analysts wrote in a note.

Co-Chief Executive Rubin Ritter told a conference call for journalists that sales should be helped by a campaign Zalando is about to launch with Calvin Klein.

"We are confident that we will deliver a unique combination of fast growth and clear profitability for the full year," said Ritter, adding the company was growing significantly faster than any competitor.

He said quarterly profitability was hit by temporary factors including an early start to the winter season forcing Zalando to discount summer fashion and bring forward marketing to the third from the fourth quarter.

Zalando also invested in a mobile app and a pilot scheme to offer same-day delivery to customers in Cologne and Berlin.

Zalando said it would reach close to 3 billion euros in revenue for the full year, implying an annual growth rate of 36 percent, above a revised company target for revenues to grow by 33 to 35 percent. Analysts expect 2015 sales of 2.97 billion, according to Thomson Reuters Smart Estimates.

Quarterly sales grew 34.4 percent in Zalando's core markets of Germany, Austria and Switzerland and rose even faster - 52 percent - in its other markets.

ASOS last month forecast sales growth for the 2015-16 year of about 20 percent and an operating margin of 4 percent. It has a target to eventually hit 2.5 billion pounds ($3.80 billion) of annual sales.

$1 = 0.9305 euros
$1 = 0.6576 pounds


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