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Zalando sales rise as EBIT drops

Berlin-based etailer Zalando has posted 23.4% sales growth year on year for 2017, while investing in expansion hit the bottom line. 

Revenue for the year grew to €4.5bn (£4bn), compared with 23% growth to €3.6bn (£3.2bn) in 2016.

Its adjusted group EBIT dipped by 0.6% to €215.1m (£190.3m). in 2017, while net income declined by 15.7% to €101.6m (£89.9m).

The etailer said: “A lower marketing cost ratio could not fully offset the higher fulfilment cost ratio as investments into capacity and customer experience continued. These investments saw the ramp-up of new fulfilment centres in France, Italy, Sweden, Poland and Southern Germany.

“Other investments included same-day delivery, return pick-ups, and Zalando Fulfilment Solutions, a service for brand partners, where the company takes on the fulfilment services for brands that are selling in its partner program.”

Zalando is aiming for sales growth of 20-25% in 2018, and expects to create around 2,000 jobs, adding to an existing staff count of 15,000.

The new jobs will be mostly based in Berlin, where it will open a new headquarters later this year.

It is targeting a margin on adjusted earnings before interest and taxation (EBIT) of between 4% and 5%, compared with the 4.8% it achieved in 2017.

Zalando said it would continue to invest heavily, including building new warehouses and automating existing ones, as well as developing in-house software. It also plans to launch a beauty offering in late March and will expand to two new unnamed countries in Europe. 

The etailer predicted that capital expenditure in 2018 will reach around €350m (£309.7m), up from €244m (£215.9m) in 2017, excluding mergers and acquisitions.

Co-CEO Rubin Ritter said: “In 2017, we made significant headway and won market share in all our markets. In 2018, we will target our 20-25% growth corridor for the fourth consecutive year, underlining our conviction that focus on growth and market share wins is the right path to maximise long-term value.”

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