2024-08-06 11:41:26
Zalando announces big profit jump, sets sights on China
The online retailer reported strong profits and growing sales last quarter. Still, the management changes came at a time when the company was struggling.
Heading to China? A Zalando parcel moves along a conveyor belt at the Vaud mail sorting centre.
Photo: Laurent Gillieron (Keystone)
Online retailer Zalando continued to benefit from its savings measures in the three months to the end of June. It also benefited from major sporting events such as the European Football Championship.
The company has also recently started using artificial intelligence (AI) and visual content. Surprisingly, the company also announced its expansion into China and the departure of Chief Financial Officer Sandra Dembeck. On the stock exchange, Zalando shares rose 3.3% on Tuesday morning.
As announced by DAX Berlin, a new location will be added in Shenzhen to explore new sales channels in social media. “Social commerce” refers to the sale of goods with the help of influencers.
AI collaboration continues to expand
Zalando also announced that it will further expand its partnership with OpenAI, the AI company known for ChatGPT. The goal is to find more ways to use generative AI in online shopping.
The group has become increasingly reliant on visual content, such as showing products against different backgrounds. It claims that the corresponding content has a higher engagement rate than traditional article photos. Video content makes customers three times more likely to buy products. In addition, fewer customers return products. This is helpful because returns are costly for the company.
Adding profits and revenues
Earnings before interest and taxes (EBIT) adjusted for special effects rose by almost a fifth to 171.6 million euros in the second quarter, the company announced in Berlin. Inventory management and reduced logistics costs had a positive impact. The bottom line was that profits rose by almost 70 percent to 95.7 million euros compared with the same period last year. The company confirmed its annual targets.
Zalando said demand had increased significantly, especially in the sports, designer and beauty sectors. Gross merchandise value rose 2.8% to 3.8 billion euros in the three months to the end of June. Sales rose 3.4% to around 2.6 billion euros.
At the same time, CFO Dembeck announced that she did not want to extend her contract until the end of February 2025. The search for a successor is said to be underway.
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