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European e-commerce retailer Zalando has reported an 87% surge in adjusted EBIT to €144.8m (£124.6m) during the second quarter of the year.
The group said that its profitability was boosted by better order economics amid bigger average basket sizes resulting in lower fulfilment costs.
In combination, this also led to a 2.7 percentage-point improvement in the adjusted EBIT margin to 5.7%.
The partner business share of Fashion Store GMV also rose almost 7% and the share of items shipped by Zalando Fulfilment Solutions increased 3% in the second quarter, as its partners are continuing to grow their businesses on its platform with more choosing to use its fulfilment service offering.
However, gross merchandise volume (GMV) declined 1.8% to €3.7bn (£3.18bn) in a challenging environment with revenue dropping 2.5% to €2.6bn (£2.24bn) in the second quarter compared with a year ago.
Looking ahead, the group expects adjusted EBIT in 2023 to be between €300m (£258m) to €350m (£301.2m).
Additionally, it stated that GMV and revenue are more likely to be in the lower half of the initial guidance ranges of 1% to 7% for GMV and -1% to 4% for revenue.
Robert Gentz, Co-CEO of Zalando, said: “We are investing in areas such as storytelling and technology that will boost future growth. New brands such as lululemon and Lancôme will excite our customers and help make the core challenges in fashion e-commerce can be solved at scale.
“Our new size and fit tool will make the shopping experience even better. This tool is a step change solution in the industry that will help customers find the perfect fit before delivery. This is truly exciting as it shows how one of the core challenges in fashion e-commerce can be solved at scale.”
Dr. Sandra Dembeck, Zalando CFO, added: “Amid the temporarily challenging retail environment, we continue to drive sustainable efficiencies in fulfilment and marketing,” said “These efforts have paid off this year with adjusted EBIT almost doubling in the second quarter. Such success puts us in pole position to shift our focus more towards investment and future growth initiatives.”
