After eliminating its losses in the German market two years ago, the big Berlin-based e-tailer announced on Friday that it had finally reached the breakeven level in terms of operating results (Ebit) for the whole group during the second quarter ended June 30. This would compare to a negative margin of 9 percent in the comparable period of last year, but the management indicated that Zalando may not be able to move into the breakeven zone for the full financial year because of price promotions planned for the third quarter
Based on preliminary figures, sales grew to a range between €520 million and €560 million, up from €437 million in the second quarter of last year. No details were given at this stage about the evolution of the turnover in the different countries.
The positive trends in the latest quarter are attributed to a good start of the summer season, thanks to warm weather, and to new efficiencies in logistics and marketing. As previously reported, the company has set up two new corporate distribution centers in Mönchengladbach and Erfurt. Furthermore, Zalando feels that it can afford to spend less on TV advertising as a percentage of sales now that it is well-established in the market.
Interestingly, Zalando's customers are now using tablets and smartphones more frequently to place their orders. m-commerce represented 41 percent of the traffic on the website in the latest quarter, up from 38 percent in the first one. Customers can use m-commerce now in all the countries where Zalando is operating, and the company is developing and introducing new mobile internet applications.
The improving results are raising investors' expectations that Zalando will go public soon, perhaps after it reports the final figures for the second quarter. However, according to the latest reports, Kinnevik and other shareholders are considering the flotation of only between 10 and 15 percent of the big web store's capital instead of a previously projected 20 percent.
One reason is the fact that Asos and other big internet retailers are trading on the stock exchange less briskly than before. On the other hand, Alibaba has raised the planned introduction price of its shares on the New York Stock Exchange from $50 to $56, implying a total stock market capitalization of $130 billion for the Chinese company, which is said to control 80 percent of the country's e-commerce market.